Institute for Money, Technology & Financial Inclusion

This is the 2-page executive summary for the IMTFI White Paper Report: The New Financial Architecture and the Public Mobile Money System in Ecuador

Current Ecuadorian President Rafael Correa’s broader political program called the “Citizens’ Revolution,” has prompted a restructuring process of its domestic financial architecture through a combination of legal reforms, new public policies, and the transformation of the national payments system. As part of this endeavor, a new mobile money (MM) system is being introduced to diversify the available forms of payment. The high percentage of Ecuador’s unbanked population (70.5%) in comparison to the increased permeation of cellphone coverage in Ecuador (16.9 million cell phones for 15.4 million people) indicates the tractability of this project at the national level. The MM system will be executed and administered by the Central Bank of Ecuador(BCE), making it the first ever publicly mandated and Central Bank-administrated mobile payments scheme to be implemented in the world. MM is thus conceived as a liability of the state, with all the qualities and functions of legal tender.

Inspired by 21st century socialism, this MM system is based on the idea that money and systems of finance and payment are public goods. The BCE’s objective is to avoid the privatization of MM because other cases have indicated that mobile operators tend to become the sole providers of services, generating monopolistic and oligopolistic practices. Guided by a constitutional mandate to remake Ecuador’s economy as a “popular and solidarity economy” the CBE’s MM model seeks public benefit, financial inclusion of marginalized populations and poverty reduction. The project expects its main users to be savings and credit cooperatives, community organizations, family businesses, informal economic actors, and others who have been traditionally excluded from the banking system.