Ecuador has big plans to move away from their existing currency of the U.S. dollar. According to Phys Org, the country is planning to create a digital currency, which they say would be the first issued by a central bank.
Central Bank expects the electronic currency to begin circulating in December. However, they are not disclosing any of its technical details, other than that it will not be a crypto-currency like Bitcoin. The amount of currency they create will be dependent on demand.
The new digital currency will exist alongside greenback and will be backed by liquid assets (as required by law). It is being targeted toward those who aren't able to afford traditional banking — 2.8 people, or 40 percent of the Ecuadorian economy.
Currently, the plan is to make and receive payments with cellphones. This is a similar system to what has become popular in Kenya and Tanzania, where such systems are privately run.
The country will not be replacing the U.S. dollar altogether, says President Rafael Correa. They set the U.S. dollar as their currency in 2000 after a banking crisis. Many analysts and experts feel this is the country's first move to eventually replace the U.S. dollar, as increasing the money supply will ultimately devalue the U.S. dollar in Ecuador.
The new digital currency will be used voluntarily and will not be used as payment to public employees or state contractors.
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