Chile’s central bank has announced that it will be deciding on a strategy for the roll-out of its digital currency in 2022. The announcement was made by the central bank president and came against the backdrop of other central banks and policymakers trying to keep up with cryptocurrencies.
There has been a global crackdown on cryptocurrencies, with regulators in several countries getting increasingly alarmed at the rapid rate of expansion of the crypto market, which had exceeded a record-breaking $2 trillion in April. China also announced on Friday that it was completely banning all crypto trading and mining operations.
Creating A Digital Peso
The president of Chile’s central bank, Mario Marcel, made a presentation before legislators in which he stated that he had created a high-level working group that would study a medium-term strategy that would look at minting a “digital peso.” This would help the central bank meet the needs of an “increasingly challenging payments industry.”
The president of the Chilean central bank stated to lawmakers,
“From objectives linked to the needs of the public, financial stability and effectiveness of monetary policy, the Central Bank will define, at the beginning of 2022, a proposal with options and requirements for an eventual issuance of a digital peso in Chile.”
Rising Use Of Digital Payments
According to Marcel, Chile has seen a significant increase in the use of digital payments, with more than 40% of household consumption and expenses handled through credit cards and other similar systems. The use of digital transfers has also shown quite an increase.
Regulators worldwide are worried that a significant rise in the use of privately operated cryptocurrencies could significantly undermine the control that they have over the financial systems and monetary policy and fuel systemic risks and financial crimes that could hurt investors. The central bank president further stated that the working group would study the risks to Chile’s banking system if it adopted digital currencies and the efficiency of its monetary policy.
Meanwhile, Related Developments Around The World
Several countries around the world are exploring the use of central bank digital currencies, with their central banks already launching studies and pilot projects based around them.
Federal Reserve To Release CBDC Report Soon
The Federal Reserve Chair, Jerome Powell, has announced that the reserve will release a report containing the findings of research conducted to examine central bank digital currencies (CBDCs). Powell informed gathered reporters that the report would publicly address concerns around CBDCs, while also allowing the central bank to set up its own study into them.
Ripple To Help Bhutan Launch Its CBDC
Bhutan’s central bank has revealed that it will be piloting its CBDC using Ripple’s CBDC private ledger. The use of CBDCs and Ripple’s private ledger would greatly improve financial inclusion among the citizens of Bhutan and also help boost the use of cashless payments. The digital version of Bhutan’s Ngultrum will look to increase financial inclusion in Bhutan by around 85%. The use of Ripple’s private CBDC ledger will allow the Bhutanese central bank to access a whole network of CBDC ledgers, allowing interoperability.
House Of Lords To Investigate Implications Of Adopting CBDCs.
The House of Lords in the UK has announced the launch of an Economic Affairs Committee, which will look into the implications of adopting a central bank digital currency in the UK. The committee will listen to feedback from anyone who may be interested in sharing their views on CBDCs. The House of Lords Economic Affairs Committee’s inquiry will complement the inquiries already being conducted into CBDCs by the Bank of England and the HMRC Treasury.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
