Ecuador launches new digital currency but most residents know little about it

Bill passed last July gives Central Bank authority to create digital
dollars, but opinions divided along party lines amid concerns of a
presidential power grab
Sitting in the corner of a crowded Quito market behind a table piled high
with ripe mangos, Karina Ubillus watches as a nearby stall-holder digs
out a wad of crumpled dollar bills from a pouch at her waist and
laboriously counts out the change to a customer who has just purchased
some mangos.
Karina and her neighbour are both dressed in the turquoise and red
dresses traditionally worn by Quichua indigenous women; both of them
eke out a living in the countrys informal economy and neither has a
bank account.
They and the other traders in the market are just the sort of people
president Rafael Correa says will benefit most from Ecuadors plan to
become the first country in the world with a digital currency.
But in this corner of Quito, few have even heard of the new currency
and those who have are skeptical that it can work. Digital money is a
terrible idea for the markets says Karina. A lot of people here are
illiterate and cash works just fine.
The new system, which is officially set to launch on Thursday, will work
much like mobile phone bank payments in other countries: users will be
able to exchange hard cash for digital money which is stored in an
electronic wallet on their phones.
As with other mobile payment programmes, text messages will allow
users to make payments to other accounts, but what makes this plan
different is that this is the first time a national government will have full
control; everything from the creation of new units to securing the
system against attack will be managed by the Central Bank of Ecuador.

This is better than private options because our priority will be the users
and not profit, David Duque, Digital Money Analyst at the Central Bank
of Ecuador told The Guardian. Forty percent of Ecuadors population
does not have a bank account and we want to make it easier for the
unbanked.
So far, however, Duques enthusiasm has not been matched by ordinary
Ecuadorians: customers have been able to create a digital account since
December, but so far, said Duque, only 8,000 people have done so in a
nation of 15 million. We have not yet launched a big promotional
campaign, he said.
If the launch goes according to plan, from Thursday, users will be able to
walk into any participating bank and exchange their physical dollars for
the equivalent amount in digital dollars and send or receive payments
from other users.
Later in the year the government plans to begin accepting the currency
for taxes and other bills. Taxi drivers and municipal buses also plan to
accept the digital dollar in the coming months. We expect 500,000
active users by the end of the year, said Duque.
The bill which gave the Central Bank the authority to create digital
dollars was passed last July, but most residents know very little about
the new system. With scarce information to go on, opinion is strongly
divided along party lines.
Rafael Correa, the small Andean nations president since 2007, has a
fiercely loyal base of supporters who say he has improved the countrys
infrastructure and increased political stability.
Correa, a champion of Ecuadors digital dollar, has long criticized the
countrys 2000 decision to abandon its own currency, the Sucre, and
adopt the US dollar.
But an increasingly hostile opposition accuse Correa of authoritarianism
and worry that some of the new reforms are thinly veiled power grabs.

The bill that authorized the digital dollar also banned Bitcoin and other
digital currencies.
He just wants to print more money so he can have more power and
spend money we dont have, university student Carolina Anas told The
Guardian. If he wanted to help us then why would they ban any
competition?
The Central Bank has repeatedly stated that each digital dollar will be
backed by a physical dollar that the government will hold in reserve
and that this is not the first step toward Ecuador abandoning the dollar.
Selso Penafiel, 42, owns a small pizzeria and plans to accept the digital
dollar. The world is changing and we have to get in front of those
changes, he said. Correa is a smart man and I have a lot of confidence
in anything he supports.
Jose Merino, 58, a worker at a Coco Cola bottling factory outside Quito
shrugged when asked about the digital dollar. Its just an experiment
for now. Ill wait and see what other people think before I try it.