The Central Bank of Chile said it is exploring the possibility of issuing a national digital currency, the digital peso. The bank released a report titled “Central Bank Digital Currency Issuance in Chile,” which looks at the possibility of creating a central bank digital currency (CBDC) in the future, the mechanism it could use, and how it would consult with all sectors of the economy on the issue.
The Central Bank of Chile is considering issuing a CBDC
More and more banks in Latam are considering issuing their own central bank digital currencies (CBDC) to take advantage of the various opportunities they can provide. The Central Bank of Chile has just released a new report examining the opportunities and disadvantages that issuing a digital peso can bring. The report, titled “Central Bank Digital Currency Issuance in Chile,” also looks at the different forms such a currency could take.
The document, authored by the bank’s payments group, was “drafted in the context of the growing digitalization of payments, which has been driven by rapid technological advances and the emergence of new instruments and players in the payments market.” In this sense, the report concluded that:
The issuance of the CBDC would enhance the benefits associated with digital transformation while mitigating some risks. In particular, CBDC can contribute to the development of a more competitive, innovative, integrated, inclusive and sustainable payment system.
The report also calls for further cost-benefit analysis of issuing such a currency.
More research is needed
While many central banks around the world are studying and researching the issue of issuing digital currencies, not many have moved to the execution stage. The paper calls for more analysis and research in this regard, as there are virtually no standards or best practice guidelines on how to proceed with such a project.
The digitization of the currency could also cause unintended negative consequences for the national economy, so any future implementation should be “carefully analyzed.” However, the central bank believes that now is a good time to meet this challenge and start working on its technical capabilities, as well as moving forward with projects aimed at testing different implementations of the currency.
The bank also said it will continue to consult and maintain an open dialogue with all institutions in the economic space. Brazil and Mexico are other Latam countries also working on their own CBDCs.
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