The Ecuadorian Central Bank has issued a mandate that requires banks and financial institutions to accommodate Ecuadorian digital currency along with their existing fiat currency options within a stipulated time frame.
The rise of Bitcoin has shown the world that Digital Currency can be a reality. The concept of digital currency has been there for a long time, but there were lot of issues which prevented its execution. But it all changed with Satoshi Nakomoto’s paper on Bitcoin in 2008, followed by the launch of a working bitcoin model by 2009. Since 2009, Bitcoin has been growing exponentially, facing challenges along the way, only to emerge stronger than before. The success of Bitcoin made digital currency a reality.
A lot of countries across the world are currently are watching the developments in Bitcoin network closely, so that they can make use of similar technology to introduce digital versions of their nation’s legal tenders. But one country has moved forward and embraced digital currency much before anyone else could. Earlier this year, Ecuador introduced digital dollar called Electronic Money System (EMS). With plans to launch in three distinct phases, it was introduced on the Christmas Eve of 2014 which marked the beginning of the first phase. It was followed by the second phase, which kicked in on 25 February 2015. The first phase involved creation of digital wallets for the citizens which was later followed by activation of EMS transactions. The third phase involves enabling payment of taxes and utility bills with EMS.
EMS has been receiving a mixed response so far. In order to ensure everyone gets on board, the Ecuadorian Central Bank has recently issued an ultimatum to the banks in the region to adopt EMS within a year. According to the Resolution 064-2015-M issued by the Central Bank, all banking and financial institutions operating in Ecuador should provide EMS option for transactions within the last date. In order to do so, they will be required to open an EMS account with the government.
The mandate will be enforced in three different slabs, depending upon the assets held by the financial institutions. The three slabs – US$1 billion and above, US$ 150 million to 1 billion and less than US$150 million will have to comply within 120, 150 and 360 days respectively.
Ecuador is doing everything it can to ensure that the transition from physical currency to EMS happens smoothly and no one is left out during the process.