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| The central bank says the electronic currency will make life easier for consumers |
The
Ecuadorean government has released more details of its plans to create what it
calls the world's first digital currency issued by a central bank.
Central
bank officials say the electronic money, as yet unnamed, will start circulating
in December.
The new
money will be used alongside the existing currency in Ecuador, the US dollar.
President
Rafael Correa has said the digital currency will help those who cannot afford
traditional banking.
Central
bank officials say the electronic money will be used to pay government
bureaucrats in a "hygienic manner".
The
electronic currency is also designed to help poorer Ecuadoreans make and
receive payments using mobile phone technology.
Such mobile
payment schemes have become very popular in African countries where they are
privately run.
Ecuador
introduced the US dollar as its currency after a crippling bank crisis in 2000.
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| President Rafael Correa has denied any plans to replace the US dollar |
Since then,
the government has tripled social spending and the state is currently billions
in debt, mostly to China which buys most of Ecuador's oil.
Analysts
say the introduction of the electronic currency could be used to increase the
money supply and devalue US dollar holdings - a first step towards abandoning
the US dollar.
President
Correa has denied this is the case.
Exchange
rate
"It
will be interesting to see who controls the exchange rate," said Jeremy
Booney - a product manager for Coindesk - a website for digital currency news.
"So
when an Ecuadorean exchanges the digital currency for US dollars, is it going
to be the government who sets the rate, or is it down to supply and demand?
"And
the government could decide to put the digital currency up if it wants."
There are
also challenges in persuading Ecuadoreans to use a digital currency, Mr Booney
said.
"Bitcoin
(a global digital currency) has faced huge challenges to get people around the
world to use it, and that is a worldwide movement with thousands of developers
working on it."
The new
currency was approved by Ecuador's National Assembly last month. At the same
time, stateless digital currencies like Bitcoin were banned.
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