Crisis management: Spanish community creates its own cryptocurrency

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A smartphone that says cryptocurrency in English lies next to an outstretched Spanish flag on a stone surface.

In order to boost its own economy, the Spanish community Lebrija has issued its own crypto currency to the local population. The „Elio“ is linked to the euro. The ECB should, however, monitor developments closely.

In the Spanish province of Seville, the municipality of Lebrija has chosen a creative approach to the economic consequences of the pandemic. Like the Spanish news agency Europa Pressreported, the city council has decided to issue its own cryptocurrency, the „Elio“. The digital payment method is part of the municipal reactive plan, firmly linked to the euro and is transferred to 593 selected beneficiaries as economic aid. The amount varies between 50 and 200 euros. In addition, the cryptocurrency should also benefit 393 local companies. 400 euros are earmarked for this per company. According to the news agency, 165 stores have already registered on the platform. The City Council’s technical director, David Pérez, says about how it works:

The city council has created a digital wallet for the cryptocurrency Elio, which is pegged to the euro. Users have to download the dedicated app in order to benefit from the advantages of the Elio.

Pepe Barroso, Mayor Lebrijas, adds:

The creation of this virtual currency will ensure that the aid received will be implemented directly in local stores.

Elio as a pilot project for the ECB?

The „Elio“ is primarily intended as an additional tool in the context of economic aid. The cryptocurrency could also play a secondary role. As is well known, the ECB is still in the test phase for a digital euro. A decision is still pending as to whether and, above all, when a digital euro could be introduced. The ECB should therefore follow developments in the cryptocurrency with an eagle eye and incorporate the knowledge gained from this into its evaluations. ECB boss Christine Lagarde sees the possible use of the e-euro as more complementary to the physical counterpart. In a newspaper interview she said:

It could be important in a number of future scenarios, from a decline in the use of cash to preventing the introduction of foreign digital currencies in the euro area.

National cryptocurrency on the rise in China

While the ECB is still evaluating in Europe, China is already one step further. In December, a lottery was repeatedly held in Suzhou City, with 20 million digital yuan being raffled among the population. The lottery consisted of a total of 100,000 packages, each worth 200 digital yuan. All citizens with permanent residence in the east Chinese city were eligible to participate. The winners were able to spend the cryptocurrency at participating stores and online shops at the annual “Double-12” shopping festival.