The monetary authority still has doubts about the characteristics of this type of issuance. In Mexico, the debate on CBDCs between the authorities remains at an early stage.
Roberto Campos Neto, the governor of the Central Bank of Brazil, talked about a discussion on a CBDC (central bank digital currency) in that country. The economist said that they still need to define details about its issuance but the debate is in its culmination phase.
“We are at an advanced stage in the process of developing a CBDC in Brazil. I think the project involves some questions that have not received any answers yet,” said the executive.
Campos Neto considers that doubts are surrounding the type of issuance that the CBDC would have. The authorities seem not to have defined the characteristics of the supply and the exclusiveness of the central bank to issue it.
The debate that the bank is conducting concentrates on a working group that the institution announced in August 2020. At that time, Brazil was setting the standard in the Latin America region concerning CBDCs.
The group proposes to follow a model for issuing the “digital real”, identify risk factors, promote financial inclusion, and safeguard user information. Although Campos Neto did not offer a tentative date for presenting the report, he said that digital currencies have “various consequences” for monetary policy.
Mexico Interested in CBDC, but Not in a Hurry
Alejandro Díaz de León, Governor of the Bank of Mexico, also talked about digital currencies of central banks. However, the official did it from a more distant issuance perspective, saying that it is not just a question of doing it or not. He explains that the discussion focuses on knowing how and when to do it.
“The main aspects to deal with are the needs of consumers and their protection. We have to see the best technological solution for this. DLTs (distributed ledger technologies) have the power to provide a solution since they are not centralized,” said the executive.
Independently on Mexico’s path regarding CBDCs, it is all a matter of money, according to Díaz de León. For that reason, he commented that the role of the central bank should be fundamental. The governor considers that a “digital peso” would just be an extension of the currency that the State already provides. However, this new form of Mexico’s national fiat currency will show a “different face to users.”
The Bank for International Settlements (BIS), as the coordinating agency for central banks around the world, is promoting the creation of CBDCs. In recent days, the institution presented new platforms to transfer digital currencies. They gave explanations about Helvetia, for payments with tokenized assets between banks, and Rio, for the massive transmission and analysis of data.
China and Lithuania, among other countries, already have advanced their CBDC projects. The Asian country is leading the race for the issuance of central bank digital currencies. This new form of completely digitized and programmable money is theoretically under issuance control.
By Alexander Salazar