Chile puts CBDC plan on hold until end of 2022 for more analysis

Chile’s central bank has delayed plans for a central bank digital currency (CBDC), saying issuing a digital Chilean peso would require a deeper analysis of benefits and risks, and promised to release a new report by the end of the year.

A sort of Report The bank’s May 11 report includes an initial assessment of Chile’s CBDC and explores the country’s current payment system and the benefits, risks and principles of issuing a digital peso.

While the current payment system “works well” and is “well positioned to adapt to recent challenges,” the bank said a CBDC would enhance and mitigate any risks from digital transformation, adding:

“CBDC will help enable a competitive, innovative and integrated payment system that is inclusive, resilient and protects people’s information.”

Regarding the issuance of the digital peso, the bank believes there is insufficient information to make a final decision, and will “conduct a series of workshops, presentations and meetings with various peers” to inform the new report.

September 2021 Central Bank of Chile said It will develop a strategy with proposals and options for launching a CBDC in early 2022, and set up a working group to study a potential digital peso.

The bank outlined its concerns about cryptocurrency adoption in the country, citing its potential for use in money laundering, illicit activities, and the potential to disrupt banks’ access to funding if used as a substitute for bank deposits.

“Issuing CBDCs is also a good option to address the challenges associated with the potential democratization of so-called virtual currencies, which, despite their current small role in payment systems, could potentially change the way financial markets and monetary policy transmit, if Its use has become widespread.”

Chile ranks 18th in the world for cryptocurrency adoption in 2021, according to data from politician 14% of Chilean respondents said they owned or used cryptocurrencies that year, marking Chile as the fourth largest cryptocurrency user in South America.

related: 90% of central banks surveyed are exploring CBDC — BIS

Chile does not ban the use and trading of cryptocurrencies, but it is as concerned about cryptocurrencies as other South American countries. In early May, the Central Bank of neighboring Argentina Step in to stop two banks From offering encryption services it said it needed to “mitigate the risks posed by encryption”.

Brazil is also focusing on regulation, having been passing a bill since 2015 to create a regulator to oversee the crypto market Getting closer to approval As of mid-April.

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