UPDATED 07:09 EDT / JANUARY 01 2015

Ecuador rolls out phase one of state-backed digital currency

1After months of anticipation, Ecuador has officially launched the first ever digital currency backed by a nation. Called the Electronic Money System (EMS), it aims to help the nation’s population better manage their finances, while competing with the more popular but officially banned Bitcoin.

EMS is being rolled out in three phases so as not to totally scare the wits out of people in Ecuador. The first phase of the roll out began on Christmas Eve. Called the introductory phase, it lets people create official EMS accounts using their mobile phones. During this phase users can open accounts and change passwords, but they won’t actually be able to get their hands on any EMS readies. The first phase will be in effect until mid-February 2015.

To sign up for an EMS account, it’s necessary to own or at least have access to a mobile phone. All you need to do is dial *153# to access the EMS menu which will then give you instructions on how to setup your account. Users must also supply their citizen’s identity number and provide proof that they voted in recent national elections, a step that’s designed to prevent foreigners from accessing the system.

The second phase of EMS will roll out at the end of February 2015. During this phase, Ecuadorians will be allowed to perform transactions such as reloading, unloading and delivering electronic money to individuals, stores, and business who have also joined the EMS system.

Phase three will go live in late 2015, adding more features like being able to pay for municipal services such as water, electricity, telephone, taxes and others, as well as facilitate bank account money transfers and even remittances.

The Central Bank of Ecuador will act as the middleman for EMS and facilitate transactions. It offers a form of security as users need to identify themselves to be able to create an account, unlike Bitcoin. On the downside, it also means the government can keep a careful watch of each and every transaction made using the service.

Ecuador is experiencing economic problems right now, and is looking for ways to turn things around. It sees EMS as something that could be part of the solution to its troubles. EMS is backed by liquid assets or assets that can easily be turned into cash if needed and will be used to pay off its debts while working alongside the US dollar as the nation’s official currency.

photo credit: Free Grunge Textures – www.freestock.ca via photopin cc

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