Ecuador follows Bitcoin ban with digi-currency proposal
Virtual currency will have state bank backing
Ecuador has decided a state-backed digital currency might help it to avoid a financial crisis.
Bloomberg reports that the South American nation will implement a fiat digital currency that's to sit beside the US Dollar, its current legal tender.
The nation will institute a monetary authority to administer the dollar, the report says, and the currency won't be exchangeable for the country's government bonds.
Exactly what format the digital currency will take isn't clear. Although Bloomberg calls it “Bitcoin-like”, that seems to refer only to its status as a digital currency. There's no hint that the currency would be mineable like Bitcoin, nor that it would be anonymous or be based on cryptographic algorithms.
In fact, there's so far no implementation detail at all. The National Assembly, which passed the banking reforms late in July, issued a statement quoted by PanAm Post:
“Digital money will stimulate the economy; it will be possible to attract more Ecuadorian citizens, especially those who do not have checking or savings accounts and credit cards alone. The digital currency will be backed by the assets of the Central Bank of Ecuador.”
The country has a Bitcoin ban in place, which as PanAm Post reports means that current Bitcoin operations in the country face shutdown and confiscation.
The legislation that passed Ecuador's government on the weekend also implements deposit guarantees for bank customers. ®
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