The Central Bank of Chile has revealed that it is studying how to issue a national digital currency, the Digital Peso. The bank has released a report entitled “Issuing a Central Bank Digital Currency in Chile,” which explores the possibility of creating a central bank digital currency (CBDC) in the future, what mechanism it might use, and how all sectors of the economy will be consulted on this issue.
Chile’s central bank considers issuance of CBDC
More and more banks in Latin America are considering issuing their own central bank digital currencies (CBDCs) to take advantage of the various opportunities it may offer. The Central Bank of Chile has just released a new report that examines the opportunities and drawbacks that the issuance of the digital peso may bring. The report, entitled “Issuing a Digital Currency for the Central Bank of Chile,” examines the different forms such a currency might take.
The document, prepared by the Bank’s Payments Group, “was formulated in the context of the increasing digitization of payments, which has been driven by rapid technological progress and the integration of new tools and players in the payment market.” In this sense, the report concluded that:
Issuing a central bank digital currency would make it possible to enhance the benefits associated with digital transformation, while mitigating some of its risks. In particular, a central bank digital currency can contribute to the development of a more competitive, innovative, integrated, inclusive and flexible payment system.
The report also calls for further analysis of the cost-benefit balance of issuing such a currency.
More studies are needed
While many of the world’s central banks are studying and investigating the issuance of digital currencies, not much has moved to the implementation stage. The document calls for further analysis and studies in this regard, as there are virtually no standards or best practice guidelines on how to proceed with building such a project.
The digitization of the currency can also cause unforeseen negative effects on the national economy, so any future implementation should be “carefully analyzed”. However, the Central Bank believes that it is the right time to take on this task and start working on its technical capabilities, advancing the development of projects directed to testing various applications of the currency.
The bank also stated that it will continue to consult and maintain an open dialogue with all institutions in the economic field. Brazil and Mexico are other countries in Latin America that are also creating their own CBDCs.
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