The Central Bank of Chile revealed that it is studying how to issue a national digital currency, the digital peso. The bank issued a report entitled “Issuance of a central bank digital currency in Chile”, where it explores the possibility of creating a central bank digital currency (CBDC) in the future, the mechanism it can use and how it will consult all sectors of the economy on this issue.
Central Bank of Chile considers CBDC issuance
More banks in Latin America are considering issuing their own central bank digital currencies (CBDCs) to take advantage of the different opportunities they may present. The Central Bank of Chile has just released a new report studying the opportunities and disadvantages that issuing a digital peso can bring. The report, entitled “Issuance of a digital currency by the Central Bank in Chile”, also studies the different forms that this currency can take.
The document, authored by the bank’s payments group, was “framed in a context of increasing digitalization of payments, which has been driven by rapid technological progress and the incorporation of new instruments and players in the payments market”. In this regard, the report concluded that:
Issuing a CBDC would make it possible to leverage the benefits associated with digital transformation, while mitigating some of its risks. In particular, a CBDC could contribute to the development of a more competitive, innovative, integrated, inclusive and resilient payment system.
The report also calls for a more in-depth analysis of the cost-benefit balance of issuing this currency.
More studies needed
While many central banks around the world are studying and investigating the issuance of digital currencies, few have moved on to the execution phase. The document calls for further analysis and studies in this regard, as there are practically no standards or guidelines for good practices on how to proceed with the construction of such a project.
Currency digitization can also have unforeseen negative impacts on the national economy, so any implementation in the future would have to be “carefully analyzed”. However, the central bank considers that this is the time to face this task and start working on its technical capabilities, and move forward in the development of projects aimed at testing different implementations of the currency.
The bank also stated that it will continue to consult and maintain an open dialogue with all institutions in the economic area. Brazil and Mexico are other Latin American countries also working to establish their own CBDC.
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