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Estonia Halts Plans for National Cryptocurrency

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Estonia has shelved plans to develop its own national cryptocurrency after the idea prompted criticism by banking authorities and Mario Draghi, the Italian economist and President of the European Central Bank.

In August last year, the Managing Director of the Estonian e-residency program, Kaspar Korjus, came up with the idea of creating and issuance of Escoin. Korjus proposed that Escoin would become the Baltic country’s virtual currency and with time would evolve to become the official currency, to serve Estonia’s e-residency program.

Bloomberg, citing Siim Sikkut, an official who heads up the information technology strategy for the Eastern European country, reported it had planned to peg the cryptocurrency to the euro and would offer the digital tokens to all of its citizens. But instead they will be offered to foreigners who use its electronic identification system to sign documents and set up companies remotely, otherwise known as e-residents.

We agreed in discussions with politicians that Estcoin will proceed as a means for transactions inside the e-resident community,

– Sikkut explained. The official told Bloomberg:

Other options aren’t on the table. We’re not building a new currency,

According to the report, there are more than 35,000 identification cards issued for people outside the country, with most of them going to residents of Finland, Russia, and Ukraine. The e-residency program was launched in 2014.

Estonia, which is among the most tech-friendly countries in eastern Europe, had been one of the world leaders in terms of potentially issuing a national cryptocurrency, but the plan was criticized by Draghi earlier in the year when he said the euro should be the only currency in the country. Draghi said back in September – according to the Bloomberg report:

No member state can introduce its own currency; the currency of the eurozone is the euro,

 

European Central Bank President Mario Draghi said in September 2017,

No member state can introduce its own currency; the currency of the eurozone is the euro.

 

Draghi’s position was supported by Governor of the Bank of Estonia, Ardo Hansson, who complained about misleading reports on Estcoin from government agencies.

Rising Interest in Development of National Cryptocurrencies

Estonia is not the first country to float the idea of a national cryptocurrency. Venezuela’s Petro is already in use, backed by the country’s natural resources more so petroleum.

In the recent past, governments and central banks in different countries have also considered the potential of national or central bank-issued digital currencies. At the start of the month, Norway’s central bank said that it was exploring ways of creating its own digital currency as a supplement to its fiat currency, to ensure confidence in money and the monetary system.

Switzerland is also currently conducting an investigation to identify the risks and opportunities of creating a state-backed virtual currency.

Image Credit: Depositphotos

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