Ecuadoran presidential candidate Giovanny Andrade shared his plans to create a national cryptocurrency for the Latin American country based on the gold standard.
Giovanny Andrade is the president of the Ecuadorian-Chilean Chamber of Mining and has been a supporter of the dollarization of the Ecuadorian economy started in the year 2000 under the presidency of Jamil Mahuad.
This proposal would take advantage of growing support for cryptocurrencies both in Latin America and Globally.
Supporting Dollarization with Cryptocurrency
According to the candidate, the creation of a national cryptocurrency backed by the gold standard would further develop and support the dollarization scheme instituted by the government by facilitating transactions within the country.
In an interview with the local newspaper “Primicias”, Mr. Andrade stated:
“We are looking at ways to create an Ecuadorian cryptocurrency. This does not mean that we are going to get out from the dollarization process, we must support dollarization. But it is very important that we create a cryptocurrency for all the internal benefits of the country, such as internal transactions. This would work very well.”
Ever since 2000, dollarization has been a controversial decision in the country with many politicians proposing the de-dollarization of the national economy through different mechanisms.
While the 2021 elections have some candidates opposing to it, the criticism toward the process has been declining as time passes, with 85% of Ecuadorians considering it positive by 2015.
A Possible Shift in Attitude
Ecuador has not established a legal framework for cryptocurrency and has displayed a negative attitude toward them in the past when it banned them. While this ban has already been lifted, the central bank has stated that Bitcoin is not an authorized payment in the country.
When asked how would the national bank back the price of the national cryptocurrency, Mr. Andrade said a national gold refinery would be created to institute a national gold reserve, which would the used as the principal foundation for the cryptocurrency.
This would be an approach similar to Venezuela’s national cryptocurrency “Petro”
which was backed by the country’s oil reserves. The Venezuelan government also announced the launch of “Petro Gold” in 2018 which would work in the same way but pegged to Gold’s price.
While Giovanny Andrade is not one of the frontrunners in the presidential race according to polls, his proposal reflects a shift that has started taking place in the country toward cryptocurrencies, which is also been taking place in the rest of the continent.
Cryptocurrency’s Growing Popularity in Latin America
Latin America has been a continent historically influenced by global powers when it comes to their economies and political policies, with countries like Russia, China, and the United States sparring for getting the most allies in the region.
This “war” for influence, as well as other internal factors like corruption, has caused some Latin American countries like Argentina, Venezuela, and Bolivia to suffer from periods of high inflation and economical turmoil.
This high inflation has forced citizens of multiple countries to use the US dollar as a means of saving money, as doing so in their national currency would result in losses from the depreciation it would incur.
This results in scarcity and the imposition of restrictions on the buying/selling of foreign currency.
Cryptocurrencies offer a way for people to go around these restrictions, allowing them to access international markets to save and invest their earnings, as well as receive the international funds in the case of ONGs or family assistance.
It is estimated that the Latin American market represented around 9% of the total global market in 2019, a number that is highly likely to keep growing in the coming years.
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