Eastern Caribbean Central bank wants to digitize their EC dollar

Hey all,
There is a new trend that Central Banks want to digitize their currencies.

As an economist I think this is fabulous.
I also think that once the EC dollar is digitized that a whole new set of possibilities and use cases will appear.

You can the create DAOs in the Easter Caribbean Currency region (8 islands) that use this money pegged to the fiat money.

In this post on Linkedin I ask some questions about this fascinating trend.https://www.linkedin.com/feed/update/urn:li:activity:6535724183857565696

My question to you is: what do you think this will mean for evolving daos in the Caribbean region?

PS: Barbados has already digitized its dollar through the Fintech company Bitt.com.

And now they are bringing it to another level.

PS2: i know these 8 islands quite well. Because I’m studying their economies and have all the data.

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I’ve mentioned to @Luuk and Ruben the idea of a bonding curve (or multiple curves) that issue a token against various Carribean fiat currencies. It could become a pan-regional currency that removes the need for individual national currencies while still maintaining their value/sovereignty. I see a lot of potentially from mixing/utilizing baskets of goods w/ automated market making systems to ultimately innovate beyond traditional banking systems (which are typically Western, derived from a history of colonial oppression).

Bonding curves for reference:

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Although I don’t exactly know what a bonding curve is - need to read the primer on it - I think a basket of currencies is a great idea.

A small island like Curacao has Holland, USA, Colombia and Venezuela as main trading partners.

So we need to have the Euro, US Dollar, Colombian Peso and Venezuelan Bolivar as currencies in our basket.

We could create a spreadsheet of these currencies for past 5 years to see how the basket has gained value or decreased in value. This canbe used asa pilot.

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I think creating a basket model is a great start – I would actually recommend a few baskets. We need to think about not only fiat but also what other types of assets could be tokenized and placed in such a basket, and more importantly, how these assets could be tokenized. Finally, we have to consider who the DAO’s denizens are, and how to best serve them with this basket. For instance:

  • Could the basket include land assets, such as real estate? Could the DAO be responsible for formalizing the value of these types of assets, similar to a regulator or real estate agent? What about securities, such as local stocks and business equity? Government bonds?

  • Should the basket include cryptocurrencies, such as Ethereum and Bitcoin, as they are foundational assets of the “new crypto economy?”

  • If the DAO has members from Trinidad, does it not make sense to include other local currencies such as the Trinidad dollar?

  • Finally, there are strategic considerations for all of the above: how do you design a system where all these assets can be tokenized with the support of regulators and the private industry? Who are the key partners? Right now only USD and EUR are tokenized of the basket you presented.

I fully agree. The more assets from the Caribbean the better.

I have to learn more about tokenization. Especially for physical assets. Can you point to any primer about tokenization of (physical) assets?

With the EC dollar it might look like for every dollar (fiat money) there is a unique digital dollar (token).

As EC dollars are created by the Eastern Caribbean Central Bank and their value is currently pegged to the US Dollar at (1 usa dollar is 2.7 EC dollar) the Central bank can put that in a basket. Depending on the fluctuation of the US dollar the value of that basket will flow.

There are stock exchanges in the Caribbean. Like the Jamaican Stock Exchange, I think the Trinidat and Tobago Stock exchange also exists and the Dutch Caribbean Stock Exchange (dcsx.cw). All publically traded stocks and bonds could be added to that basket.

Physical assets are a total other game. What is the value of a piece of land on Curacao? Per square meter. I don’t know. Here you probably need oracles like real estate agents that know the value and put those in the smart contracts.

Also for the Caribbean we have hotel assets. The value of hotels is difficult to estimate. But the price of a room of a type of hotels can be found on websites like bookings.com.

The main question is:what does the value of a basket mean? Especially when you have so many assets in it? What can you use it for if you know the value of a basket went from 110 points to 125 points from october 2020 to november 2020?

I use indexes like the Consumer Price Index and the Stayover tourist index for my analysis of small islands in the Caribbean. These indexes mean something to me.

But I cannot imagine what a basket of many assets would mean.

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