Ecuador's shift from US Dollars as their national currency to a digital currency continues to fascinate me. This link is a short description of the shift that has been put into action.
What is not described anywhere that I have looked is a full transition plan. I should look harder.
Maybe I will have to read it in Spanish!
Maybe I better look for a translation!
Key numbers: 37% of adults have a bank account but there are 17 million cell phones in a country with a population of 16 million.
Equador's currency is the US Dollar. Small change in amounts less than a dollar are produced by Equador as a medium of exchange.
The link is the first paragraph of this blog contains this:
"Ecuador
has been a dollarised economy since 2000, and has enjoyed stable growth
since 2002. “It is important to note that this is not a cryptocurrency,
and neither is Ecuador launching a new currency,” said Lafferty
researcher Patrick Houlihan. “Instead, US dollars will be used, with
users going to non-banking correspondent agents, where they may credit
their mobile wallet with mobile money.”
Concluding from this statement that an Equadorian holding US Dollar currency goes to a designated agent after registering for the electronic money system and exchanges paper US currency for a digital dollar in the Ecuadorian central bank on a one for one trade.
Then what happens to the paper US dollar? It goes to the central bank. Then what happens to that US Dollar?
Hmm....
Ecuador has a National Plan for Well Being. The link is in Spanish. I must find a translation to English. It is a comprehensive plan and the monetary system is part the plan as is the environment and all the other important things that government and governance should do for its people. From the link:
"For the implementation of the system, the state had to amend the
Monetary Regime and State Bank Law (Ley de Régimen Monetario y Banco del
Estado). One of the main provisions of this regulation is
that “electronic money issuance must be an exclusive function of the
state, which ensures and gives confidence to the carrier of this payment
method, its free availability, and its condition as legal tender.” This
limits the development of private projects of mobile money in Ecuador."
Somebody has thought out this entire plan in advance. I am sure that they are not making it up as they go.
This entire monetary system change being implemented by the sovereign nation of Ecuador seems to be flying way below the radar. Not much mention of it and the documentation on it exists in Spanish but the Spanish language translator says the document is too big to translate to English.
The Central Bank of Ecuador is the issuer of this e-money. Bitcoin is an e-money that people obtain by exchanging paper US currency or electonic dollars in a bank account for the Bitcoin e-currency. In the situation of Ecuador it is the first nation (maybe Jordan was first?) where its central bank issues the currency?
From the link in the first paragraph:
The
launch will also be closely watched by Panama, which like Ecuador is
fully dollarised, and Uruguay and Costa Rica, which are partly
dollarised economies.
I am sure that there are many more entities closely watching what Ecuador is doing.
I would like to see the full plan. There is something big happening here.
Google search on: ecuador electronic currency. There is a lot of talk about it at the google hits but not much specific info or plan.
This link says this about the new system: "On the downside, it also means the government can keep a careful watch of each and every transaction made using the service." Maybe that is a feature, not a bug or a potential problem but a potential benefit creating responsible social control over the social monetary medium of exchange as a decision making tool.
This link says this: "Interestingly, the EMS system has more similarities to a primitive version of Apple Pay than to Bitcoin’s Blockchain or any current crypto-currency."
The Sound Money Project attacks the idea at this link
Professor White, directly tackling the idea of an electronic currency
that would be handled by the Ecuadorian government, notes that:
There is no plausibly efficient or honorable reason for the
Ecuadoran government to go into the business of providing an exclusive
medium for mobile payments. Consequently it is hard to make any sense of
the project other than as fiscal maneuver that paves the way toward
official de-dollarization. I gather that President Correa does not like
the way that dollarization limits his government’s power to manage the
economy. He has compared the limitation to “boxing with one arm.” But as
I have already emphasized, retiring the government from boxing against
the economy by means of money-printing is precisely dollarization’s
great virtue.
This is an excellent link at IMTFI that presents the purpose of Ecuador's plan in a socio-political context. That is what money is (should be). A creature of a socio-political context. Not a thing of a Financio-Political context. Financio being a word that I just created that is really just a sub-set component of a greater Socio-Political context. The best role of politics in the relationship is the one it plays as "We the People", not "We the Banksters". Private money interests get upset when there is any discussion of the sovereign government asserts its right to the monetary system. Bitcoiners don't like it. This from the link at the beginning of this paragraph:
"One of the most groundbreaking components of this New Financial
Architecture is the implementation of an electronic monetary system,
operated mainly through mobile phones, for which the Central Bank of
Ecuador (CBE) will serve as the issuer and administrator. Officials at
the CBE consider money to be a public good and see the electronic money
system as a way to democratize its use."
Ecuador is doing a revolutionary thing that poses a great threat to the established structure of big Finance! It is a dangerous thing to do that. Big Finance is big money and rules the world, rules the USA. Government taking back its sovereign right to the monetary system will not be allowed by Finance!
China grants 5.3 billion dollar line of credit to Ecuador.
How does that play in relation to Ecuador's monetary system plan?
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