Tunisia has announced the launch of its digital currency, the E-dinar. The small North African country claims to be the first country to issue a “central bank digital currency”. In English that is a Central Bank Digital Currency or CBDC.
Symbolic transaction already done
According to the Russian state newspaper TASS, Tunisia cooperated with the Russian company Universa (UTPX) to launch the digital currency. A symbolic transaction was made at the time of launch. Marouane El Abassi, the head of the central bank of Tunisia, sent one E-dinar to a representative of the International Monetary Fund.
Everyone actually expected that China would be the first country with its own CBDC, but Tunisia seems to have the scoop from scratch. The E-dinar is not a cryptocurrency such as bitcoin or the Venezuelan Petro. Instead of creating a new currency that Venezuela has done, Tunisia only digitizes its existing money. The state remains the property of the money and the value is linked to fiat currency.
However, use is made of the Universa blockchain. This should ensure a cheaper system to maintain, and it makes the E-dinar more transparent.
Customers will be able to spend the E-Dinar in thousands of stores, cafés and restaurants in the coming months. The coin can be purchased online or through one of the planned two thousand kiosks in the country.
Alternative to dollars and Swift
Tunisia has not only facilitated transactions within the country, but also looks beyond national borders. The Tunisian central bank hopes that with the arrival of the E-dinar, the country will no longer have to use US dollars for international transactions.
The country also hopes to become less dependent on the frequently used payment protocol SWIFT (Society for Worldwide Interbank Financial Telecommunication). Although SWIFT has brought the world a lot, there are also risks. SWIFT can exclude countries from their service by switching off the payment channel. This is the case with Iran, for example. With the E-Dinar, the central bank of Tunisia hopes to have found an alternative.
Universa deserves well on this
The Russian Universa is the technology partner of Tunisia. The company receives a percentage of every transaction on the system. However, the company claims it does not have access to keys and does not have permission to view transactions.
According to Alexander Borodich, CEO of Universa, the compensation is worth it because:
Electronic banknotes cannot be forged. Every digital banknote is protected by cryptography, it has its own digital watermarks, just like the paper counterpart. And the production of such a banknote is 100 times cheaper than wasting ink, paper and electricity for the printing press.
We seem to be on the eve of a world full of CBDCs. Malaysia, the Philippines, Argentina, Brazil and China are all working on their own digital currencies. Singapore, Thailand and Canada are considering building one. And the US and Europe? Well ..