A member of Banxico said that the central bank’s digital currency would not displace cash. Mexico has had one of the first laws in Spanish America that regulate cryptocurrencies since 2019.
The deputy governor of the Bank of Mexico (Banxico), Jonathan Heath, said his country is preparing the launch of its central bank digital currency (CBDC). Everything seems to indicate that they are open to adopting those centralized assets in 2024.
Heath told a local media outlet that they are working on a project to have the CBDC operating by the end of 2024 at the latest. That announcement coincides with what the newly appointed governor of Banxico, Victoria Rodríguez Ceja, stated in early December. The official told the Finance and Public Credit Commission of the Mexican Senate that the financial entity was evaluating the implementation of a CBDC.
Ceja noted that international authorities had recognized the possibility to extend the functionalities of the national legal tender through a CBDC. She highlighted that regulators are aware of the growing interest from citizens in digital assets and their evolution.
It is important to remember that Mexico has one of the first laws in Spanish America that regulate the trading of cryptocurrencies. The so-called FinTech, enacted in 2019, also controls collective financing and management of electronic payment funds.
The Central Bank Digital Currency Will Coexist with Cash
The governor of Banxico also talked about the coexistence between the CBDC and the national fiat currency. In that regard, she stated the digital currency would not replace banknotes and coins because part of the Mexican economy is informal. She also commented that there is low financial inclusion, and few people have access to traditional banking.
Heath added that they would use paper money as the predominant payment method nationwide for a long time. However, she said that they did not want to be absent from these technological advances, on which they will devote themselves to working.
The Mexican President Chose to Remain Orthodox in Financial Matters
Mexicans may be surprised with the plans of Banxico authorities, especially after the statements of the Mexican President in October. Andrés Manuel López Obrador said his government hopes to remain orthodox in financial matters.
López Obrador considers that his government should only maintain the national income and ensure proper tax collection to avoid evasion. In addition, he stated that his country does not need to look for innovation.
He also clarified that he does not intend to follow the lead of countries like El Salvador regarding the adoption of Bitcoin and other cryptocurrencies.
The Implementation of the CBDC Will Affect the Privacy of Citizens
Central bank digital currencies like the one announced by the Bank of Mexico can benefit nations and companies in cross-border trade. However, their use poses the risk of loss of privacy.
These centralized digital currencies are not anonymous, and governments can take advantage of them to control the population. Besides, the State can confiscate them whenever they deem it appropriate.
The importance of cryptocurrencies is evident, of which international authorities are aware. For that reason, they consider that using CBDCs is the best way to extend the functionalities of fiat currencies. In that way, governments will ensure to keep the use of money by citizens under their control.
By Alexander Salazar
