At an event, the Governor of the Central Bank of Chile opened up her thoughts about the possibilities of a Chilean CBDC.
The central bank digital currency based in Chile would have the need to receive offline payments. Chile’s central bank governor Rossana Costa highlighted this information at an event held in Switzerland by the Bank for International Settlements.
The senior official offered a policy file on the issue later this week but said that no decisive move got made on whether to handle the digital parallelism of the Chilean peso. Costa stressed that the CBDC should carry out its online and offline activities, adding that the technology to achieve this goal is not necessarily effective today.
Costa added that the system should allow authorities to follow the transaction later while protecting personal data.
The official also highlighted that the CBDC would have to exist and be a convertible currency to work with cash and commercial banks to become a safer currency. She added that the pilot projects could get executed after further debates with the public and private areas in the nation later this year.
Other Regions Supporting These Ideas
Also, in jurisdictions such as the European Union (EU), officials consider balancing the ability to lead discreet cash-like transactions with the need to follow illegal finances.
These regions consider bringing more private payment methods for small acquisitions; Ghana also considered making its CBDC available offline.
Other users think the main issue is a waste of time and that central banks should focus their efforts on areas where payments are now a challenging task. At the same BIS event, Ravi Menon argued that existing payment networks are enough to address the needs of regular citizens.
What the BIS Says about this Situation
A recent BIS survey highlighted that nine out of ten central banks consider creating their virtual currencies due to competition from Bitcoin but are grappling with design issues to confirm safe access and privacy.
International standard setters have widely supported moves to issue CBDCs but show concerns that central banks could lose their control over the situation.
Tobias Adrian, current director of the International Monetary Fund’s Monetary and Capital Markets Department, expressed that citizens may have incentives to get their money out of their financial system in many nations with weak institutions.
Most nations have some form of capital controls in place, and there is both direct and anecdotal evidence that crypto-assets serve as tools to play that role.
The IMF recently said that nations should set an expand on their laws to ensure that procedures such as restrictions on payments abroad include cryptocurrencies. At the end of last year, the Central Bank of Chile revealed the creation of a team of 25 people who would study the possibility of making the digital peso and its consequences.
By: Jenson Nuñez