Chile puts CBDC plans on hold until end of 2022 to undertake more analysis

Published at: May 12, 2022

The Central Bank of Chile has delayed its plans for a central bank digital currency (CBDC) saying the issuance of a digital Chilean peso requires a deeper analysis of the benefits and risks, promising a new report toward the end of the year.

A report from the bank published on May 11 included a preliminary evaluation of a Chilean CBDC. It explored the country’s current payment system, along with the benefits, risks and principles of issuing a digital peso.

The bank stated while the current payment system “works adequately” and has been able to “adapt well to recent challenges,” a CBDC would enhance and mitigate any risks of digital transformation, adding:

“A CBDC would contribute to achieving a competitive, innovative and integrated payment system that is inclusive, resilient and protects people’s information.”

Regarding issuing a digital peso, the bank considers that there isn’t enough information to make a final decision and will “carry out a series of seminars, presentations and meetings with different counterparts” to inform the new report.

In September 2021, Chile’s central bank said it would create a strategy with proposals and options for a rollout of a CBDC in early 2022 and formed a working group to study the potential digital peso.

The bank outlined its concern regarding crypto adoption in the country, citing the potential for crypto’s use in money laundering, illicit activities and the ability to disrupt banks’ access to finances if used as an alternative to bank deposits:

“The issuance of a CBDC is also a good alternative to face the challenges associated with the potential massification of so-called virtual currencies, which, although for now they have a very small role in the payment system, could alter the functioning of the financial market and the transmission of monetary policy if its use becomes widespread.”

Chile sits 18th in the world for cryptocurrency adoption in 2021, according to figures from Statista. And, 14% of Chilean respondents said that they owned or used crypto that year, which also marks Chile as the fourth largest user of crypto in South America.

Related: 90% of surveyed central banks are exploring CBDCs — BIS

Chile doesn’t prohibit the use and trade of cryptocurrencies, but it joins other South American countries in its concern over crypto. In early May, the central bank of its neighbor Argentina stepped in to stop two banks from offering crypto services, saying it needed to “mitigate the risks crypto poses.”

Brazil is also eyeing regulation with a bill circulating since 2015 with the aim to create a regulatory agency to oversee the crypto market, moving closer to approval as of mid-April.

Tags
Adoption
Digital Currency
Government
Central Bank
Chile
Cbdc
Banks
South America
Related Posts
BIS: No Central Bank Digital Currencies Focus on Cross-Border Payment
Cross-border payments do not appear to be a priority as countries all over the world to engage with their own digital currency projects, a new report says. While global governments are competing to become the first country in the world to issue a central bank digital currency (CBDC), no CBDC project really focuses on cross-border payments, according to a new study released by the Bank for International Settlements (BIS). No ongoing global CBDC projects explicitly focus on cross-border payments The BIS’ new CBDC revelation is part of the bank’s quarterly review, the “International banking and financial market developments,” issued on …
Adoption / March 2, 2020
Crypto Bahamas: Regulations enter critical stage as gov't shows interest
The crypto community and Wall Street converged last week in Nassau, Bahamas, to discuss the future of digital assets during SALT’s Crypto Bahamas conference. The SkyBridge Alternatives Conference (SALT) was also co-hosted this year by FTX, Sam Bankman-Fried’s cryptocurrency exchange. Anthony Scaramucci, founder of the hedge fund SkyBridge Capital, kicked off Crypto Bahamas with a press conference explaining that the goal behind the event was to merge the traditional financial world with the crypto community: “Crypto Bahamas combines the crypto native FTX audience with the SkyBridge asset management firm audience. We are bringing these two worlds together to create a …
Adoption / May 3, 2022
Bahamas Digital Dollar to Roll Out Across All Islands in H2 2020, Governor Says
While major industry actors argue that central bank digital currencies (CBDC) are years or decades ahead, the Bahamas plan to adopt a CBDC no later than 2020. John Rolle, the governor of the Central Bank of the Bahamas (CBOB), has reportedly confirmed that the Bahamian digital dollar initiative will be introduced across all islands in the second half of 2020. Bahamas has already launched a pilot in the Exuma region According to a Feb. 13 report by local publication The Tribune, Rolle has presented the plan addressing a Bahamas Chamber of Commerce and Employers Confederation on the initiative, which is …
Adoption / Feb. 14, 2020
Hong Kong Steps Up Research Into Central Bank Digital Currency
The Hong Kong Monetary Authority (HKMA) has revealed it is conducting research into applications for a central bank digital currency (CBDC). Ejinsight reported on the news — announced during the Hong Kong Fintech Week — on Nov. 7. HKMA reportedly aims to release a major report on its findings in Q1 2020. Collaboration with the People’s Bank of China HKMA had also just revealed it had signed a blockchain collaboration with a subsidiary of the Institute of Digital Currency at the People’s Bank of China (PBoC) — an institution which many expect will be the first globally to launch a …
Adoption / Nov. 7, 2019
Bank of Jamaica completes first CBDC pilot
The Bank of Jamaica (BoJ) has successfully completed its first central bank digital currency (CBDC), targeting a national rollout in the first quarter of 2022. After proceeding with initial CBDC prototype testing in March 2021, Jamaica’s central bank finished an eight-month-long pilot last Friday, the Jamaica Information Service reported. As part of the pilot, the BoJ minted 230 million Jamaican dollars ($1.5 million) worth of the CBDC for issuance to deposit-taking institutions and authorized payment service providers on Aug. 9, 2021. The central bank then issued 1 million JMD ($6,500) worth of digital currency to the staff at BoJ’s banking …
Adoption / Jan. 3, 2022