The Bank of England, established in 1694, was a model for many central banks around the world. (QQ7/Shutterstock)
Marcelo M. Prates is a lawyer at the Central Bank of Brazil and holds a doctorate from Duke University School of Law. The views and opinions expressed here are his.
Although the of central-bank digital currencies (CBDCs) is becoming increasingly confusing, when we talk about CBDCs we’re talking about a type of money with at least three features:
The CBDC is, thus, a conceptual type of money that hasn’t yet been created, except for some . But myths surrounding CBDCs are already piling up.
No, Ecuador wasn’t the first country to issue a CBDC. Ecuador did have a bad experience with a so-called sovereign digital currency, the “,” or electronic money system, launched in December 2014. The official promise was that regular people could open digital accounts at Banco Central del Ecuador (BCE) and, with the help of a cell phone, spend or transfer money deposited in these accounts.
But “money,” in this case, was U.S. dollars, as Ecuador had dollarized its economy in early 2000. So “dinero electrónico” has never been a true sovereign currency digitally issued by the Ecuadorian central bank. “Dinero electrónico” was instead an attempt to create digital dollars. The BCE exchanged U.S. dollar bills and coins deposited by the public for a digital representation denominated in dollars that could allegedly be used by the depositor, with no loss of value, to make payments and transfer funds electronically.