Chile is evaluating a digital currency that would meet its issuance in a similar way to the banknotes. The white paper for this digital currency would get published in early 2022.
The Central Bank of Chile is now advancing to achieve the development and release of its digital currency. The institution reported this news on Wednesday, September 22, after its president, Mario Marcel, confirmed his participation in a digital event organized by the Inter-American Development Bank (IDB) and the Chilean Ministry of Finance.
During the digital meeting “Innovation in the financial industry: a boost to financial reactivation and inclusion,” Marcel revealed the creation of a working team committed to generating a digitalization strategy to encourage the Chilean economy.
Through a press release, the institution highlighted that this team would have among its tasks to evaluate the goal, requirements, and regulations for the development of a digital currency issued by the Central Bank.
This currency would meet a creation similar to bills and coins, according to the text. Likewise, it states that this digital currency would be a tool for citizens to pay in shops and among themselves so that financial institutions can settle payments between peers.
The working group, which will be under the counselor Alberto Naudon’s supervision, must create a medium-term plan regarding digital means of payment in the South American nation. They would consider retail, wholesale, cross-border, and even private digital payments.
The publication added that the working group would also consider crypto assets, the central bank’s digital currency, and the infrastructures that support the various means of payment, internal and external.
According to the Central Bank of Chile, There are New Challenges for CBDCs
The Chilean Central Bank argues, in its publication, that central bank digital currencies, commonly known as CBDCs are receiving a lot of global attention and research as they have the potential to make different public policy objectives easier.
According to data from research firm Bison Trails, CBDCs are under the magnifying glass of at least 80 of the central banks worldwide. And some of these banks have already made significant progress, such as China, Brazil, or the Bahamas.
Regarding Chile, the Central Bank considers that cryptocurrency can offer various improvements in the security of payments. This digital currency would also bring a lot of financial opportunities for citizens. It would make sending money across Chilean borders easier, as well as encourage more financial inclusion.
The working team also warned about a series of challenges that they could face when taking the step of creating their CBDC. These challenges might be greater than those of the issuance of physical or fiduciary money in matters such as the provision of credit in the economy, financial stability, and privacy during a transaction.
The advance in the Chilean bank’s CBDC happens in parallel with the intentions of the Chilean government to create a regulation for financial technology companies (Fintech) that could balance cryptocurrencies.
The discussion of that bill, introduced by the government of Sebastián Piñera before Congress, received its approval this Thursday, September 23.
By: Jenson Nuñez