⚠️ HRF CBDC ⛓️🪙 alert from HRF for Ecuador (16-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:

Despite a prior attempt, Ecuador is in the research phase for Central Bank Digital Currencies amidst concerns of corruption and widespread mistrust.

✅ 🇪🇨 is in the research phase for Central Bank Digital Currencies (CBDC).

✅ The previous attempt with a similar system, launched by the Banco Central del Ecuador in 2014, was shut down in 2018.

✅ The first phase of the project in 2014 involved a mobile payment system, “sistema de dinero electrónico”.

✅ The system, based on the U.S dollar, is debated as whether it's a true CBDC since it's more like a payment system rather than an independent form of money.

✅ The second phase rolled out in 2015, it involved processing transactions, receipts, and bank transfers while the third phase allowed citizens to pay utility bills and taxes.

✅ Public trust in the system started to fade in 2016, as the government and central bank faced criticisms over excessive monetary policy and an inability to safeguard users' funds.

✅ The system was decommissioned in 2018 after a legislation passed by Ecuador’s National Assembly. At its peak, it had 500,000 users, yet 71 percent of the accounts remained unused.

✅ 2023 Freedom in the World report scored Ecuador at 70 out of 100, highlighting the prevalence of corruption and its potential impact on a new CBDC system.

✅ According to Freedom House, weak judiciary and lack of investigative capacity contribute to Ecuador's expanded corruption costs reaching an estimated $68 billion between 2007 and 2019.

#Ecuador #CBDC #BancoCentralDelEcuador #CentralBank #DigitalCurrency #MonetaryPolicy #FreedomHouse

As Ecuador ponders another CBDC attempt, is wider public participation and transparency key to building trust in such systems? How can it ensure that a new CBDC system cannot be exploited for corruption or political favoritism?

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