The Central Bank of Chile has said it will withdraw its plans to launch a CBDC by the end of 2022 and will conduct a thorough investigation and further analysis of the product prior to launch.
The digital peso has to wait
Banco Central de Chile Publishing This report focuses on the country’s current currency network and examines the risks and benefits of issuing digital versions of national currencies. On the surface, central banks are optimistic about such financial products and believe they can strengthen the economic system and ensure consumer protection.
“CBDC will contribute to achieving a competitive, innovative and integrated payment system that is inclusive, resilient and protects people’s information.”
The bank also argued that the Chilean peso could be a suitable alternative to cryptocurrencies such as Bitcoin.
“The issuance of CBDCs is also a good alternative to facing the challenges associated with the potential mass production of so-called virtual currencies that, although currently playing a very small role in the payment system, could change the functioning of virtual currencies. of financial markets and monetary policy. If use becomes widespread, it will be passed on.”
Meanwhile, the bank has withheld its intention to launch a CBDC until the end of 2022. Governor Rosanna Costa said it must operate both online and offline before it can be integrated into the country’s financial network. Naturally, she added, Chilean authorities should create a system to track CBDC transactions.
Additionally, the Chilean digital peso should be convertible to cash, work with commercial banks and provide secure transactions, Costa said.
Once the bank has done an investigation and resolved the issue, it will decide whether and when to launch a CBDC. The organization has promised to release a report on the matter by the end of the year.
9 out of 10 central banks seek to launch a CBDC
Introducing digital versions of national currencies has been the task of many central banks over the past few years. A recent study conducted by the Bank for International Settlements (BIS) found that 90% of institutions are working to launch such products.
Additionally, nearly 50% are in development or “concrete experiments” on CBDCs.
Countries such as China, Nigeria, Malaysia and Thailand are leaders in this field. Their authorities are very fond of central bank digital currencies and often undertake projects to popularize them.
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