Questions About Electronic Money

Doubts about electronic money are not disappearing. And we do not know what is worse: whether they truly want to dispel them.

Is electronic money a threat to our economy? Yes, it is. Especially because of how it is conceived in our legislation and because of the factors that have been adding up in recent days and do not allow us to feel at ease.

The first point is its conception.

Electronic money is not conceived as an electronic wallet in which our money in the bank backs the transactions we make with this currency, which would be the logical approach.

It is not designed that way because, if it were, private banks would be the ones participating in the process. They would be the ones responsible for ensuring that such backing exists and, if they failed in that task, they would ultimately be sanctioned and regulated by the State and its agencies.

Is electronic money a threat to our economy? Yes, it is. Especially because of how it is conceived in our legislation and because of the factors that have been adding up in recent days and do not allow us to feel at ease.

But here, the entity that will privately manage — and already manages — the issuance of electronic money is the Central Bank. No one else. And we know that the Bank also manages State accounts and the mandatory deposits of private banks through reserve requirements.

By law, its independence is now history, and it acts hand in hand with government interests. There is no trust. It is difficult for there to be any when it collaborates with the State by helping it pay its large bills.

There are also suspicious factors. Two, to be precise. The first was the visit of the person who generated a large part of the Greek crisis and wanted to take it to the abyss: Yanis Varoufakis, a supporter of electronic money. He has already spoken with Moreno and proposed this to him when they met.

The second is a curious resolution issued by the Internal Revenue Service allowing advertising and dissemination expenses related to electronic money issued by the Central Bank as a means of payment to be 100% deductible.

Currently, a taxpayer may only deduct up to 4% of their taxable income for advertising expenses. Why this strange incentive to promote electronic money?

Article published in Diario El Heraldo on Sunday, May 7, 2017.