The Central Bank of Chile, it is studying how to issue a national digital currency, the digital peso, and studying the opportunities and drawbacks that the issuance of a digital peso might bring.

The bank issued a report titled “Issuance of a Central Bank Digital Currency in Chile,” which studies the possibility of the creation of a central bank digital currency (CBDC) in the future, the method it might use, and how it will discuss with all sectors of the economy on this issue. It also studies different forms that such a digital currency might take. On Thursday a report on the benefits and challenges of this project published where the President of the issuing body, Rossana Costa announced that in early 2023, the central bank of Chile will decide on the launch of its digital currency (CBDC).

The payments group of the bank which is framed in a context of increasing digitization of payments, which has been driven by rapid technological progress and the incorporation of new instruments and players in the payment market has been authored the documents. Although the document calls for more analysis and studies in this regard. There are no standards or best practice guidelines virtually on how to proceed with the construction of such a project.

In a report published by Reuters, Mario Marcel, the Minister of Finance and Council of the Central Bank a high-level working group was formed for the purpose of developing a strategy for the issuance of the "digital peso," which will address the demands of the "increasingly demanding payments industry."

A CBDC would enhance the benefits associated with digital transformation while reducing some of its risks. A CBDC could contribute to the development of a payment system that is more competitive, innovative, integrated, inclusive, and resilient.

According to the central bank, it is the time to face this task and start working on its technical capabilities, and advance in the development of projects directed to test different implementations of the currency. The bank also stated a consultation and maintaining an open dialogue with all the institutions in the economic area need to be continued.

More banks in Latam are considering the issuance of their own central bank digital currencies (CBDCs) so as to take advantage of the different opportunities they might present. Other countries in Latam like Brazil and Mexico are also working to establish their own CBDC. Although many central banks in the world are studying and investigating the issuance of digital currencies but many didn’t move to the execution phase.

Indrani bose

CBW - External Analyst

INDIA