⚠️ HRF CBDC ⛓️🪙 alert from HRF for Ecuador (28-DEC-2023)

🗝️ℹ️ (Key Information)

CBDC Status: Research

CBDC Launch: n/a

CBDC Model: n/a

CBDC Issued: n/a

Inflation Rate: 3.47%

One-sentence summary:

Ecuador's research into Central Bank Digital Currencies (CBDCs) sparks concern given its turbulent past with electronic money systems and prevalent corruption.

✅ Ecuador restarted its CBDC research after shutting down a similar project in 2018. The national bank, Banco Central del Ecuador, primarily ran the old endeavor.

✅ The electronic money system "sistema de dinero electrónico" first launched by Banco Central del Ecuador in 2014. In December of 2014, Ecuadorian citizens aged 18 and above could open mobile accounts to access the system. Although it looked and felt like a CBDC, its legitimacy was always a subject of debate, as it was majorly a payment method built on the U.S Dollar.

✅ The 2015 saw progression with the electronic money system facilitating transactions, receipts and bank transfers. In the latter half of that year, Ecuadorians could even settle utility bills and tax obligations through it.

✅ Confidence plummeted in 2016 when Gabriela Calderón de Burgos, an economic columnist, made damning remarks about the system, signaling lack of trust and potential misuse. Merchants reportedly avoided the system due to lack of confidence in the central bank.

✅ Instituted a shutdown in 2018, the Ecuadorian National Assembly passed a law that discontinued estado dinero electrónico" and replaced it with private sector alternatives. One professor of economics, Lawrence White, hailed this as a victory for the Ecuadorian populace and a cautionary tale of public preference for established money forms.

✅ It should be a worry: Ecuador's score of 70 from Freedom House’s 2023 Freedom in the World report signals corruption issues. This raises the question: Could conditions be worsened by the introduction of CBDCs?

✅ The rampant corruption and weak judiciary in the country are major stumbling blocks. The potential for governmental misuse of CBDCs for purposes like surveillance, control, and political favoritism is of grave concern.

#Ecuador #CentralBank #DigitalCurrency #HumanRights #MonetaryPolicy #BancoCentral #FreedomHouse

What implications do you believe the reintroduction of a government-controlled digital currency could have on Ecuador, given its history and prevalent corruption? How might these potential issues be mitigated for the sake of human rights and economic stability?

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