Seems like a great way for them track every single thing you buy.
Indeed !
Topic: Ecuador: There's no *new* digital currency (Read 3934 times)
Indeed !
Seems like a great way for them track every single thing you buy.
Well it's not mandatory to use the digital currency so not every single thing. Actually very few people are using it at the moment.
And I guess nobody willing to hide the transaction would use it.
It definitely will take time to catch on.
For a person with a bank account, it would be easier to do a wire transaction with fiat, wouldn't it?
More privacy in it as well.
More privacy: absolutely!
However it's easier to transfer money with this new system than doing a wire transfer when using the mobile phone.
You just need to enter the destination phone number and the amount.
To do a wire transfer (at least here) you need to previously register the destination so it normally takes several minutes.
But yes it will be more useful for people that don't have a bank account, a smartphone or a mobile Internet connection.
Seems like a great way for them track every single thing you buy.
Well it's not mandatory to use the digital currency so not every single thing. Actually very few people are using it at the moment.
And I guess nobody willing to hide the transaction would use it.
It definitely will take time to catch on.
For a person with a bank account, it would be easier to do a wire transaction with fiat, wouldn't it?
More privacy in it as well.
Seems like a great way for them track every single thing you buy.
Well it's not mandatory to use the digital currency so not every single thing. Actually very few people are using it at the moment.
And I guess nobody willing to hide the transaction would use it.
Seems like a great way for them track every single thing you buy.
Gold is the only currency that is here to stay. Dollars come and go, but gold remains. Fiat is for the masses, gold is for the elite. Never listen to nonsense they may ever say to you, central banks of the most developed countries of the world (e.g. USA, Germany, France) wouldn't be hoarding it "just for fun".
Central banks all over the world hold gold.
While dollars certainly forms a chunk of their reserves, to ensure that foreign payments can be met, the remainder is diversified.
Small central banks are irrelevant. It is countries (and their central banks) that determine world economic policy that matter. Whom would you sooner believe, the U.S. Federal Reserve chairman Ben Bernanke who says that he doesn't understand gold, or 8,133 tonnes of gold in the U.S. Gold Reserves which constitute almost 72% of the U.S. foreign-exchange reserves?
So essentially ecuador is an extension of usa but without all of the social security and medicare help lol
No. Ecuador just uses US dollars but doesn't benefit from devaluation.
... and eventual growth. If the number of people of Ecuador grows, the new money needed will have to be bought first, with exports.
This digital currency will still be US dollars. There is no new currency involved.
No, this is not possible, unless your government is going to print fake dollars. What you meant to say is that most likely the government of Ecuador is going to emit some allegedly dollar backed currency, but I wouldn't be so naive (that this currency will be backed up by anything at all).
2 !
Gold is the only currency that is here to stay. Dollars come and go, but gold remains. Fiat is for the masses, gold is for the elite. Never listen to nonsense they may ever say to you, central banks of the most developed countries of the world (e.g. USA, Germany, France) wouldn't be hoarding it "just for fun".
Central banks all over the world hold gold.
While dollars certainly forms a chunk of their reserves, to ensure that foreign payments can be met, the remainder is diversified.
This digital currency will still be US dollars. There is no new currency involved.
No, this is not possible, unless your government is going to print fake dollars. What you meant to say is that most likely the government of Ecuador is going to emit some allegedly dollar backed currency, but I wouldn't be so naive (that this currency will be backed up by anything at all).
2 !
Gold is the only currency that is here to stay. Dollars come and go, but gold remains. Fiat is for the masses, gold is for the elite. Never listen to nonsense they may ever say to you, central banks of the most developed countries of the world (e.g. USA, Germany, France) wouldn't be hoarding it "just for fun".
This digital currency will still be US dollars. There is no new currency involved.
No, this is not possible, unless your government is going to print fake dollars. What you meant to say is that most likely the government of Ecuador is going to emit some allegedly dollar backed currency, but I wouldn't be so naive (that this currency will be backed up by anything at all).
2 !
This digital currency will still be US dollars. There is no new currency involved.
No, this is not possible, unless your government is going to print fake dollars. What you meant to say is that most likely the government of Ecuador is going to emit some allegedly dollar backed currency, but I wouldn't be so naive (that this currency will be backed up by anything at all).
So essentially ecuador is an extension of usa but without all of the social security and medicare help lol
No. Ecuador just uses US dollars but doesn't benefit from devaluation.
So essentially ecuador is an extension of usa but without all of the social security and medicare help lol
I see your point partially, mainly the part that Ecuador can't print actual bills so if they issue too any digital dollars there's a chance people won't be able to redeem all of them. Let's hope that doesn't happen.
However it doesn't make sense to say it doesn't have an agreement with the FED. Of course it doesn't, only US banks need to be authorized by US authorities. Ecuadorian banks are approved by Ecuadorian authorities.
The Government of Ecuador was authorized by the Government of US to have US dollars as official currency and legal tender. And the Government of Ecuador approves all banks in Ecuador including this new system, certainly not the FED.
It is not a matter of "approving". It is a matter of having the ability to issue real dollar equivalents. FED-approved banks can do this, because of their reserve at the FED, against which the FED will issue real dollars fresh from the press. The FED can guarantee certain bank accounts independent of the bank itself. So people having money there are relatively sure that they will see their actual dollars if they want to withdraw it, even if the bank has problems.
The equadorian gouvernment cannot print "real dollars". If people want to get out their "dollars", the equadorian government or its bank will have a big problem, and will have to issue limiting rules. They can only pretend for these points to be dollars under very restrictive conditions of redeeming or paying abroad... which means it are not really dollars.
If I were an Ecuadorian citizen, I would immediately redeem my points against genuine dollars, to be amongst the first. Like in a bank run.
If the new currency is so popular that it takes over for dollars in Ecuador, and they manage to keep the peg, the government will have an income stream which is inflation plus growth. In the current situation, the US government earns that income, and they hate it, of course.
The reason they have dollarized the economy is because investors/people need to have faith in the currency.
Why would people trust this any more than they would trust a fiat currency issued by the Government of Ecuador?
If the new currency is so popular that it takes over for dollars in Ecuador, and they manage to keep the peg, the government will have an income stream which is inflation plus growth. In the current situation, the US government earns that income, and they hate it, of course.
The US gets the income even now without any digital currency just for the fact we use the actual US dollars in Ecuador.
The FED prints dollars and benefit from it and Ecuador takes their share of inflation.
In the year 2000 the Government published as great news that the US had authorized us to use their currency. Yes, what a surprise they did.
Exactly. The economic point of this, is not the fact that it is electronic, it is about who manages them.
If the new currency is so popular that it takes over for dollars in Ecuador, and they manage to keep the peg, the government will have an income stream which is inflation plus growth. In the current situation, the US government earns that income, and they hate it, of course.
The US gets the income even now without any digital currency just for the fact we use the actual US dollars in Ecuador.
The FED prints dollars and benefit from it and Ecuador takes their share of inflation.
In the year 2000 the Government published as great news that the US had authorized us to use their currency. Yes, what a surprise they did.
If the new currency is so popular that it takes over for dollars in Ecuador, and they manage to keep the peg, the government will have an income stream which is inflation plus growth. In the current situation, the US government earns that income, and they hate it, of course.
Perhaps civil wars will start breaking out in various countries in the future, as outcomes of rebellions of citizens pressing for separation of money and state.
And now they can print dollars. That's what they have been eager to do all the time.
No, now they make their population BELIEVE that they can print dollars.
The point however, is, that if you want to use these "dollars" abroad, people will want to see REAL dollars. So or the CB of Equador has a significant stock of real US dollars, or these points they call dollars are just a make-believe. Now, as every monetary asset has this make-believe in it, there's nothing really wrong with that, but I wonder whether they really "print dollars".
I could do that too, you see. In my town, I could set up a server to which I allow people to access with their phones, and have "points" on them which I call "dollars" or "Euros". As long as people are selling stuff TO ONE ANOTHER and use their accounts, they may believe they are actually using dollars or Euros, and adopt prices as if they were.
However, the day that they want to purchase oil from Saoudi Arabia, I'm not sure that the Saoudis will accept points on my server as "dollars" or "Euros"
They might go to a bank, or an exchange, to exchange their "server dollars" into bank dollars, but then an exchange rate will be installed... So then they will see that their "points on my server" are only worth $0.01 or so
(not 0, because after all, you CAN buy bread at the bakers' in my town with it...)
You are right of course they are not real dollars, let us call them EE (Ecuador Electronic) dollars.
The issuer will say to potential users that they are as good as normal dollars. Then they will peg them to the dollar. They may put some reserves behind them, but if the project is successful, those reserves may start to dwindle. There will be lots of restrictions I suppose, every transaction is connected to a name for tax purposes, there will be volume limits in conversions and so on. But if successful, seignorage will go to the state. In the end, the peg will break, the EE dollars might be pegged to a lower level etc, just like with normal fiat in cleptocratic countries.
Take away point: It is a fiat system, a source of income for the state. The inhabitants may or not find that using them is advantageous.
Jump to: