After 15 years of taking a step towards improving its monetary system, Ecuador is changing its payment transactions again, now with the help of digital currencies.
The new monetary system of the South American country, which started completely last February, was the first state electronic payment system. Last December, Ecuador’s Electric Money System allowed qualified users to set up their accounts.
The Ecuadorian government took this step to deal with its faltering currency against the US dollar. The system is also designed to support the country’s dollar-based monetary system.
Among the advantages offered by this new monetary system is that it serves as a savings mechanism for the government. On the other hand, the economist Diego MartÃnez, delegate of the President of the Republic before the Monetary and Financial Regulation and Policy Board, said that in addition to helping the poor, mobile payments will reduce the amount that the government will spend on changing banknotes. old to US dollars. .
One of the first few steps Ecuador took was to test digital currency to pay for taxi fares. The Central Bank of Ecuador signed an agreement last February, involving 60,000 members of taxi organizations to accept electronic money. After this initiative, users will be able to select services and pay through mobile transactions. They can also send money between individuals. By the end of this year, the third phase of the electronic money system will allow users to pay for public services through mobile payment.
Ecuador’s new payment system does not require an internet connection in order to have successful transactions. It can also be redeemed as physical money, and users will be able to make payments using their mobile phones and the value stored in their accounts.
On the other hand, although the government clarified that the digital currency is not intended to replace the existing payment system in its country, some professionals inside and outside of Ecuador speculate that this step was taken by the government for other reasons. One of them is Mr. Lawrence White, Professor of Economics at George Mason University. According to him, he considered it reasonable that Ecuador provide an exclusive means for mobile payments. He sees this step as Ecuador’s maneuver towards de-dollarization. He further explained that the government’s ban on Bitcoin last July is proof that they have bigger plans and sees it as a potential move out of the US currency.
For the time being, the government still denies speculation that the digital currency will allow Ecuador’s central bank to issue new money that is not directly tied to its US dollar reserves.
Whether this step is aimed at de-dollarization or not, Ecuador took an important step in recognizing the advantages that digital currency offers. This will surely have a huge impact on Ecuador’s economy, either positively or negatively.