FRANKFURT (Reuters) - Estonia could become the first country in Europe to launch its own digital means of exchange — the “estcoin” — under plans outlined by the manager of its pioneering e-residency scheme, in place since 2014.
Kaspar Korjus said in a blog post that the estcoin would be aimed at the Baltic country’s 27,000 e-residents — foreigners who open a company there via the web — but would not be a parallel currency to rival the euro.
This year’s meteoric surge in the value of Bitcoin has focused fresh attention on digital or cryptocurrencies, which to date have all been launched by private companies but are now being considered by some governments and central banks.
Korjus said estcoins could serve one of three purposes: rewarding services to the e-resident community, verifying one’s identity online, or as a means of payment pegged to the euro.
“All three of these models of estcoin are viable and can be introduced (even without alarming the European Central Bank),” Korjus wrote in the blog post.
Estonia’s central bank governor Ardo Hansson later said the estcoin was not a government initiative and that the central bank had not been consulted.
First floated in the summer, the idea of an estcoin was rebuffed by ECB President Mario Draghi, who said in September the only currency of the euro zone was the euro. An ECB spokesman would not comment further on Tuesday.
Korjus stressed the estcoin would simply be a “token” and not compete with the single currency.
But the third of Korjus’s possible designs, which he labels “euro estcoin”, envisaged that it would work as a parallel means of payment that bypasses the banking sector.
“We would never provide an alternative currency to the euro, but it’s possible that we could combine some of the decentralized advantages of crypto with the stability and trust of fiat currency and then limit its use within the e-resident community,” he said.
And the first version, described as a “community estcoin”, would it see openly traded on traditional and cryptocurrency exchanges at a later stage.
That could put Estonia on a collision course with the ECB if estcoin adoption was wide enough to have an impact on the euro zone economy and so interfere with Frankfurt’s monetary policy.
The numbers are small so far, however. A Deloitte report cited by Korjus estimates that e-residents brought 14.4 million euros to Estonia in the scheme’s first three years and foresaw a rise to 1.8 billion euros by 2025.
Venezuelan President Nicolas Maduro announced earlier this month the launch of the “petro”, a digital currency backed by oil reserves, to shore up his country’s collapsed economy and circumvent U.S.-led financial sanctions.
In Europe, Sweden’s central bank has said it may introduce an e-version of the crown currency as the use of cash declines while Bank of England is also pondering whether to introduce a digital currency for use by businesses and households. But Denmark’s central bank said “no” to its own e-crown last week.
The ECB has been lukewarm on the subject but Executive Board member Yves Mersch said recently it would experiment with “cash on different digital technologies”.
Additional reporting by David Mardiste in Tallinn; Editing by Catherine Evans