The planned release of the digital peso in Chile in early 2022 has been postponed. The Central Bank is initiating additional analysis, the results of which will be ready by the end of the year.
The Central Bank of Chile (BCC) has published a report giving its first assessment of the benefits and potential problems that the issuance of the digital Chilean peso will entail. According to the working group, led by BCC board member Alberto Naudon, the final decision on the central bank digital currency (CBDC) rollout in the country requires a more in-depth analysis. A new report will be ready by the end of the year.
The BCC study began in September 2021 and included a preliminary assessment of Chile’s CBDC and the country’s current payment system, as well as an analysis of the benefits, risks and principles of issuing the digital peso.
The study found that issuing the CBDC would enhance the benefits associated with digital transformation while mitigating some of its risks. In particular, the report emphasizes that the CBDC can “contribute to the development of a more competitive, innovative, integrated, inclusive and sustainable payment system.”
In the report, analysts stress that the final decision on this issue requires more in-depth analysis. In particular, the working group intends to focus on analyzing the CBDC structure to prevent a possible negative impact on the functioning of the country’s financial system. Further analysis will be based on monetary policy and will aim to examine the technological and institutional foundations for the digital peso issuance.
The report notes that despite the high interest of the world’s central banks in CBDCs, few have decided to issue them at the moment. According to the BCC experts, this indicates that the process of studying digital currency takes time. Recall that the latest data shows that 90% of all central banks are studying CBDCs.
In this context, the BCC believes that it is necessary to start building capacity within the bank and begin developing specific products to test the digital peso. The bank plans to involve not only technical specialists, but also representatives of regulatory bodies, financial service providers and their users in the work on the updated payment system. For this purpose, the BCC will initiate a dialogue process with the cryptocurrency community, which will include organizing a series of workshops, presentations and meetings with industry representatives to discuss innovations in the fintech industry and the issuance of CBDCs.
The Chilean bank pointed out that the CBDC issue in no way aims to eliminate or replace traditional means of payment, but only to expand their capabilities. The bank’s main objective remains to provide people with cash.