Uruguay’s Central Bank (BCU) formally presented rollout of its pioneering digitization of the Uruguayan peso on 3 November 2017. Set now as a pilot program, the bank’s head was careful to remind it “isÂ notÂ a cryptocurrency such asÂ bitcoins,” but “aÂ currencyÂ that remains theÂ responsibilityÂ of theÂ BCU,” according to an Argentinian report.Â
Uruguay to Issue Digital Currency
In what will surely be watched by the world’s central bankers, the South American nation, stuffed between giants Brazil to its east and Argentina to its west, is acting on what until now other countries, such as Russia, have only contemplated. It announced “a six-month pilot plan for the issuance and use of digital notes of the Uruguayan peso,” in a press release.
TitledÂ El BCU presentÃ³ un plan piloto para la emisiÃ³n de billetes digitales (a pilot plan for the issuance of digital tickets), it stresses this is “a test plan with a view to evaluating whether or not it transforms into a way of doing business in the future.” The plan “consists of a test with 10,000 mobile phone users of ANTEL,” the release notes, “which will last for 6 months” and be international.Â AdministraciÃ³nÂ Nacional deÂ Telecomunicaciones (ANTEL) is the country’s government-run telecommunications provider.
Registered users will be able to interact with merchants as well as peer-to-peer in money exchanges.
Bold, but Treading Lightly
“The first issue of digital tickets consists of 20 million Uruguayan pesos, of which 7 million were already transferred to Red Pagos,” the bank declared.
“This is not a new currency, it is the same Uruguayan peso that instead of having a physical support has a technological support,” said the president of the Central Bank.
As for motive to why BCU is heading such an effort now, Mario Bergara, the bank’s president, stressed “It is expensive to print tickets, the distribution in the whole territory, the security for the transport of the same, and also the opacity that the physical ticket promotes.”
“Each person who has theÂ appÂ may haveÂ chargedÂ aÂ capÂ equivalent to aboutÂ $1,000, whileÂ companiesÂ will have available up toÂ $6,600,” the Argentinian online news source details. “The electronic wallet canÂ be chargedÂ in aÂ collectionÂ networkÂ where physical tickets will be exchanged for electronic tickets.”
Mr. Bergara adds, if the bank decides to continue the digital currency beyond half a year, physical money will not be shut off immediately, stating “for the comfort of all citizens, the transition will take a long time.”
The country is still suffering from a regional economic downturn not that long ago that saw cash shortages, rampant inflation, bank runs, and atm caps.
Images courtesy of: Pixabay, BCU, El Politico.Â
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Author: C. Edward Kelso