The Central Bank of Ecuador has begun the establishment of the new electronic money system (EMS) in the country. The lunch of the system will likely have a positive influence on the economy of Ecuador, given the fact that about 40% of the citizens are not having their bank accounts.
The Ecuadorian citizens, who are over 18 years old, are already allowed to open their accounts. In order to register within the system, people have just to dial *153# using their smartphones and see a menu explaining each step of registration.
The project is currently in its first phase, while the second stage will start in the middle of February 2015 and will include the processing of the first electronic transactions. The third stage of the project will start later in 2015 and will include bank transfers, international remittances and payments for municipal services, including electricity, taxes, water and telephone.
The EMS will utilize the US dollar as it is the national currency of Ecuador. It is comparable to Apple Pay, which is also designed to work through cell-phones. However, unlike apple Pay, it works only through SMS, not through a touchless NFC. In addition, the system will not feature blockchain public ledger, like bitcoin, but the security will be offered, as the EMS includes identification request and the phone numbers are tracked.
In H2 of 2015, the owners of the EMS accounts will be able to pay for taxes, utilities and other orders with the use of electronic cash. According to the bank, mostly all of the transactions will be free, while some of them will stipulate few cents payments.
The citizens of foreign countries, who own an Ecuador certificate, can register at the new system. Meantime, the tourists and children are not allowed to open their account within the EMS.
The project, which was approved during the Ecuador’s National Assembly session held in July, prohibited the use of other forms of electronic money, including bitcoin. Many expect the new digital currency will be able to compete with the US dollar as the legal means of payment.
The ban of using the other forms of digital currency in Ecuador is good for the new national cryptocurrency, as it eliminates the competition from the world’s leading digital currency. Besides, it better integrates the Ecuadorians into the country’s economy and banking system.
In the meantime, other countries, among others Phillippines, have decided to create their own electronic money. In October 2014, lawmaker and representative of the 5th District of Pangasinan, Kimi S. Cojuangco, proposed to enact the bill, called E-Peso Act 2014, which was designed to establish the new cryptocurrency, given the lack of the official medium of exchange for the Internet in Phillippines.