TALLINN: Estonia is looking to drag the euro into the crypto age — and tame the volatility plaguing bitcoin and its peers — by creating a digital token backed by the single European currency.
Cryptocurrencies have been on a rollercoaster ride recently, with bitcoin swinging from $10,000 to nearly $20,000 and back in under two months, and volatility is a major hurdle to their widespread adoption for electronic transactions.
One way to counter this would be to issue digital versions of an existing currency, but an initial proposal by a government agency in eurozone member Estonia was torpedoed by European Central Bank chief Mario Draghi last year.
Nevertheless, Kaspar Korjus, managing director of the Estonian government's e-Residency global digital identity programme, is back with three new proposals to create an “estcoin” digital token that “doesn’t necessarily” break ECB rules.
His three models for creating an “estcoin” would use the blockchain technology behind bitcoin and other peer-to-peer payment systems.
Blockchain experts argue that one of the proposals could pave the way for the European single currency to be used on a blockchain platform, but forex analysts are sceptical.
Estonia, the birthplace of Skype and digital global money transfer site Transferwise, is something of a pioneer in shifting government services online. And it also seeking to make it easier for businesses to operate.
Korjus’ e-Residency programme allows people worldwide to open businesses in Estonia — and hence the European Union — and manage them remotely, declaring taxes and signing documents digitally.
More than 4,000 businesses and 28,000 individuals have signed up to the scheme since it was launched in 2014.
All three “estcoin” proposals would be tied exclusively to the e-Residency programme.
In the first, Estonian e-residency holders investing in the programme would be rewarded with estcoins.
In the second, “estcoins” would be tied to a user’s e-Residency identity and used for “digitally signing documents, logging into services or enforcing smart contracts.”
In both of these versions, the estcoin’s value would depend on its usefulness on the blockchain, and would not be pegged to the euro.
A third model would essentially enable anyone in Estonia's e-residency community to use euros on the blockchain, Korjus told AFP.
Under this version, “banks would be required to move money in and out of euro estcoins, but transactions could then take place independently of them through the blockchain,” Korjus explained in an official blog post.
Here, the estcoin’s value would be backed up by “the commitment of the government to buy back every euro estcoin for one euro,” which would be the first time a cryptocurrency was backed up by a state guarantee to convert it into a major currency.
According to cryptocurrency expert Xen Baynham-Herd, this third proposal would be a “new way of expressing a currency, but not a new currency itself.”
He likens it to the “utility settlement coin,” a prototype he helped develop at Swiss bank UBS and which is intended to be used for settling trades of financial instruments.
UBS and other banks have teamed up to use blockchain technology to speed up such settlements and they suggest resolving the issue of the unit's value by linking it to an existing currency.
Baynham-Herd said the prototype unit would be backed by “existing cash reserves held at a central bank or commercial bank which is exactly what the ‘euro estcoin’ would be.”
Since such a prototype was being explored by a large number of central and commercial banks around the world, “the underlying idea isn't hugely controversial,” said Baynham-Herd, who is now head of strategy and lead economist at Blockchain.com, which develops blockchain infrastructure.
He believes ECB chief Draghi would view the new “euro estcoin” token differently, since it was “simply a new way of issuing or representing existing euro reserves. The value would be one-to-one — there's no new money being created.”
But Fawad Razaqzada, an analyst at Forex.com, was more cautious, saying if the “euro estcoin” were pegged to the single currency, it would “effectively create new euros,” which would be illegal.
Estonia makes ‘token’ effort to take euro crypto
Estonia makes ‘token’ effort to take euro crypto
Saudi Arabia’s cultural sector is a new economic engine between Riyadh and Paris, says ambassador
RIYADH: Culture has become a fundamental pillar in bilateral relations between France and Saudi Arabia, according to the French Ambassador to the Kingdom, Patrick Maisonnave.
Maisonnave noted its connection to the entertainment and tourism sectors, which makes it a new engine for economic cooperation between Riyadh and Paris.
He told Al-Eqtisadiah during the opening ceremony of La Fabrique in the Jax district of Diriyah that cultural cooperation with Saudi Arabia is an important element for its attractiveness in the coming decades.
La Fabrique is a space dedicated to artistic creativity and cultural exchange, launched as part of a partnership between the Riyadh Art program and the French Institute in Riyadh.
Running from Jan. 22 until Feb 14, the initiative will provide an open workspace that allows artists to develop and work on their ideas within a collaborative framework.
Launching La Fabrique as a space dedicated to artistic creativity
The ambassador highlighted that the transformation journey in the Kingdom under Vision 2030 has contributed to the emergence of a new generation of young artists and creators, alongside a growing desire in Saudi society to connect with culture and to embrace what is happening globally.
He affirmed that the relationship between the two countries is “profound, even cultural par excellence,” with interest from the Saudi side in French culture, matched by increasing interest from the French public and cultural institutions unfolding in the Kingdom.
Latest estimates indicate that the culture-based economy represents about 2.3 percent of France’s gross domestic product, equivalent to more than 90 billion euros ($106.4 billion) in annual revenues, according to government data. The sector directly employs more than 600,000 people, making it one of the largest job-creating sectors in the fields of creativity, publishing, cinema, and visual arts.
Saudi Arabia benefiting from French experience in the cultural field
Maisonnave explained that France possesses established cultural institutions, while Saudi Arabia is building a strong cultural sector, which opens the door for cooperation opportunities.
This comes as an extension of the signing of 10 major cultural agreements a year ago between French and Saudi institutions, aiming to enhance cooperation and transfer French expertise and knowledge to contribute to the development of the cultural system in the Kingdom.
He added that experiences like La Fabrique provide an opportunity to meet the new generation of Saudi creators, who have expressed interest in connecting with French institutions and artists in Paris and France.
La Fabrique encompasses a space for multiple contemporary artistic practices, including performance arts, digital and interactive arts, photography, music, and cinema, while providing the public with an opportunity to witness the stages of producing artistic works and interact with the creative process.
