Peru is joining the list of Latin American countries that are actively working on the development of a CBDC.
In a panel on economic institutions organized yesterday during the Annual Conference of Executives (CADE), the president of the Central Reserve Bank of Peru (BCRP), Julio Velarde, explained that the country is making progress in the creation of a digital monetary system that will make it possible to meet the challenges arising in the financial world.
Peru Wants a CBDC
According to statements posted on Twitter, the head of the Central Bank explained that the country has been able to overcome the challenges brought by the coronavirus pandemic, but that strategically they have felt the need to innovate in the way they handle finances.
Velarde explained that the Peruvian government is currently working on its CBDC with the support of other countries that are already more advanced in the matter. However, Valverde said that they are not yet ready to implement this type of financial solution anytime soon despite the advances.
“There are several important projects for the payment system, but it is premature. We have been working on a digital currency, we are with India, Singapore. This currency will be the one that will prevail in the future, we do not want to be left behind.”
Despite speaking of his caution, the CBDC may be closer than expected. According to statements picked up by Reuters, the country could be further ahead than other governments that already have some level of proven progress:
“We are not going to be the first, because we don’t have the resources to be first and face those risks, but we don’t want to fall behind. At least we are at the same level or perhaps even further ahead than similarly sized peers, although behind Mexico and Brazil.”
The Race for a CBDC in Latin America and the Caribbean Region
A CBDC is a version of fiat currency issued by a central bank with a non-physical digital expression. Different types of technology can be used, although the newest and most popular one is the blockchain. For example, France is already testing a CBDC with Tezos blockchain technology. In contrast, China has an almost-ready CBDC that does not use blockchain technology.
In Latin America and the Caribbean, several countries are in advanced stages of implementation or development of a CBDC. In addition to Mexico and Brazil (which promised an implementation for next year), the Bahamas already has its Sand Dollar CBDC. At the same time, DCash is already used as a common CBDC among Antigua and Barbuda, Grenada, St Kitts, and Nevis, and Saint Lucia.
El Salvador has no CBDC, but there are rumors that politicians close to President Bukele are working on a proposal – in addition to the fact that Bitcoin is legal tender. Similarly, Venezuela has the digital Bolivar in addition to its official cryptocurrency, the Petro.
So Peru has to work hard to catch up if it is true that it does not want to be left behind.