Chile puts CBDC plans on hold until end of 2022 to conduct further analysis

The Central Bank of Chile has delayed its central bank digital currency (CBDC) plan, promising a new report by the end of the year, saying the issuance of the digital Chilean peso requires an in-depth analysis of the benefits and risks.

all report A preliminary assessment of the Chilean CBDC issued by banks issued on May 11 and the current payment system in Chile, along with the benefits, risks and principles of issuing digital pesos were examined.

While the current payment system has been able to “work properly” and “adapt well to recent challenges,” the bank said, CBDCs will intensify and mitigate the risks of digital transformation.

“CBDC will contribute to achieving a competitive, innovative and integrated payment system that is inclusive, resilient and protects people’s information.”

Regarding the issuance of digital pesos, the bank believes that it does not have enough information to make a final decision and will “conduct a series of seminars, presentations and meetings with other counterparties” to inform the new report.

Central Bank of Chile in September 2021 said Created a strategy with proposals and options for launching CBDCs in early 2022, and formed a working group to study potential digital pesos.

The bank explained its concerns about cryptocurrency adoption in the country, citing the potential use of cryptocurrencies for money laundering, illicit activities and their ability to impede banks’ access to finances if used as an alternative to bank deposits.

“The issuance of CBDCs is also a good alternative to dealing with the problems associated with the potential mass production of so-called virtual currencies, which currently play a very small role in the payment system but could change the functioning of finance. Transmission of monetary policy.”

Chile ranked 18th in the world for cryptocurrency adoption in 2021. statista 14% of Chilean respondents said they owned or used cryptocurrency in that year, and Chile is also the fourth largest cryptocurrency user in Latin America.

Relevant: 90% of Central Banks Surveyed Are Exploring CBDCs — BIS

Chile does not ban the use and trading of cryptocurrencies, but joins other South American countries in crypto concerns. In early May, neighboring Argentina’s central bank intervened to prevent the two banks from offering cryptocurrency services, saying they should “mitigate the risks posed by cryptocurrencies.”

Brazil is also watching regulation with legislation circulated since 2015 with the goal of creating a regulator to oversee the cryptocurrency market, which is approaching approval in mid-April.

Leave a Comment