• The issuer would prefer to wait until a more detailed analysis is done of the financial implications.
• The CBDC “could contribute to the development of a more competitive and innovative payment system,” the bank notes in an evaluation report.

Chile’s central bank will make a decision on the launch of its digital currency (CBDC) in early 2023, announced the president of the issuing body, Rossana Costa, in a report on the benefits and challenges of this project published on Thursday.

The Minister of Finance and Council of the Central Bank, Mario Marcel, reported on the formation of a working group at the highest level that will be in charge of developing a strategy for the issuance of the “digital peso” that seeks to meet the needs and demands from an “increasingly challenging payments industry,” published by Reuters.

“Based on objectives linked to the needs of the public, financial stability and the effectiveness of monetary policy, the Central Bank will define, at the beginning of 2023, a proposal with options and requirements for an eventual issuance of a digital peso in Chile,” commented the official before the legislators.
Marcel claimed that around 40% of Chilean citizens use digital payments daily. Payments can be made using debit and credit cards, bank transfers, or other forms of payment such as cryptocurrencies.

“A more competitive payment system”

The report entitled “Issuance of a Digital Currency of the Central Bank of Chile,” will serve to enhance the benefits associated with digital transformation and minimize certain associated risks, the newspaper El Mercurio published citing the document.

CBDC could “contribute to the development of an innovative, competitive, integrated, inclusive, resilient payment system.”
The report prepared by the Central Bank’s Digital Payments working group, headed by counselor Alberto Naudon, showed that before making a final decision, it is necessary to carry out a deeper analysis regarding the costs and benefits of the digital peso.

It is also important to examine other current projects around the globe to find out about alternative options, and to see how they address the problems presented by the issue of digital currencies.

“This Is a Process that Takes Time”

In conclusion, the report indicates that although several dozen central banks globally plan to launch a CBDC, “for now, few have made the decision to issue it.”

This “reflects that this process takes time” and that there are no international standards or best practices, the document states.
To avoid negative consequences on the operation of the financial system, and the transmission of money policy, the CBDC design must first be thoroughly considered.

To The Flipside

• Central bank digital currencies, which are central payment instruments, can be controlled by governments. This is in contrast to cryptocurrencies like Ether, which depend solely on the users.

What You Need to Care About

• Chile ranks among Latin America’s largest economies, and it has one the strongest financial systems.

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