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Saturday, February 4, 2023

Central Bank of Chile Studies Issuance of a Digital Currency

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Central Bank of Chile Studies Issuance of a Digital Currency – Chile’s Central Bank has stated that it is looking into creating a national digital currency, the digital peso. The bank published a research titled “Issuance of a Central Bank Digital Currency in Chile,” which looks into the prospect of a central bank digital currency (CBDC) being created in the future, the method it might employ, and how it will engage all sectors of the economy on the matter.

More banks in Latin America are considering issuing their own central bank digital currencies (CBDCs) in order to take advantage of the various opportunities they may bring.

The Central Bank of Chile has just released a new paper that examines the benefits and downsides of issuing a digital peso. The research, “Issuance of a Central Bank Digital Currency in Chile,” also looks into the many forms that such a currency could take.

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According to the bank’s payments group, the paper was “conceived in a context of increased payment digitization, which has been driven by rapid technological advances as well as the utilization of new mechanisms and players in the payment industry.”

In this regard, the report came to the following conclusion:

“The issuing of a CBDC would allow for the enhancement of digital transformation advantages while limiting some of its hazards. A CBDC, in particular, might help build a more dynamic, innovative, unified, inclusive, and resilient payment system.”

The paper also recommends that the cost-benefit analysis of issuing such a currency be done further.

While several central banks throughout the world are examining and investigating digital currency issuance, few have progressed to the execution stage.

More research and studies are needed in this area, according to the document, because there are essentially no standards or best practice guidelines for how to proceed with the development of such a project.

The digitalization of the money could have unintended negative consequences for the national economy, therefore any future deployment would have to be “seriously evaluated.”

The central bank, on the other hand, believes that now is the moment to address this challenge and begin developing technical skills as well as programs to evaluate various currency systems.

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The bank also declared that it will continue to consult and maintain an open conversation with all economic organizations. Other Latam countries attempting to build their own CBDCs include Brazil and Mexico.

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