The Central Bank of Chile announced that it is currently studying the issue of a national digital currency (the digital peso) in Chile. The report, “Issuance a Central Bank Digital Currency In Chile” was published by the bank. It explores the possibility that a central bank could create a digital currency (CBDC) in future, what mechanism it might use and how it will consult all segments of the economy about this issue.
Central Bank of Chile Examines CBDC Issuance
To take advantage of the many opportunities presented by digital currencies, more banks in Latam are looking at issuing their own central bank digital currency (CBDCs). The Central Bank of Chile just released a report that examines the drawbacks and opportunities associated with the issuance of a digital currency. The report, “Issuance a Central Bank Digital Currency In Chile,” examines the various forms such a currency could take.
The bank’s payments group authored the document. It was “framed within a context of increasing digitalization of payments which has been driven through rapid technological progress, and the incorporation new instruments and players into the payment market.”
A CBDC could help to increase the benefits of digital transformation while reducing some of its risks. A CBDC could be a catalyst for the development of a more innovative, integrated, inclusive, resilient and competitive payment system.
This report calls for additional analysis on the cost-benefit ratio of issuing such currency.
More studies are needed
Many central banks around the globe are investigating and studying the issue of digital currency. However, few have made it to the implementation phase. This document requires more research and analysis, since there are no best practices or standards for how to construct such a project.
Digitization could have unintended negative effects on the country’s economy. Therefore, any future implementation of the currency digitization will need to be carefully evaluated. However, the central banks considers this the right time to confront this challenge and work on its technical capabilities and develop projects to test various implementations.
It also said it would continue to consult and maintain an open dialogue all institutions involved in the economic zone. Brazil, Mexico, and other countries in Latam are also working towards their own CBDC.