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Central Bank of Chile prolongs plans to issue CBDC

Banco Central de Chile (BCC), the country’s central bank, has been weighing the prospects of issuing a central bank digital currency (CBDC)—but it has not been able to finalize a decision on the matter.

In a recently published report, the BCC continues to dissect the country’s payment system and where a digital peso will fit in. It maintains that the Chilean financial system meets all the payment needs of the country and is resilient to challenges at present. 

Albeit, the BCC also agrees that a CBDC will help drive competition, innovation, and greater financial inclusion in the country. It adds that a CBDC will significantly demotivate Chileans from flocking to highly risky digital currencies, which it had repeatedly warned about.

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

Based on these advantages, the central bank has extended its timeline for reaching a final decision on the issuance of the CBDC. While the central bank announced in September 2021 that it would have decided by early 2022, as reported by Reuters, the latest report kicks the ball to the end of this year. 

The BCC says it needs to gather more information and so will be conducting a series of “seminars, presentations, and meetings with different counterparts.” A report of its information gathering will be ready later this year. 

Chile not alone in needing more time to consider CBDCs

Other central banks, including the Bank of Israel (BOI), the Hong Kong Monetary Authority (HKMA), and the European Central Bank (ECB), have recently published updates on developments around their CBDC plans. 

A recurring theme in the updates has been that concrete opinions have not yet been formed on what CBDC should be. However, the Bank of International Settlements (BIS) remains confident that more countries will roll out their CBDCs soon. 

Per a recent BIS report, nine out of every ten central banks are currently exploring digital equivalents of their country’s currency. The countries’ reasons also include more seamless cross-border payments. 

Meanwhile, Chile continues to be a global leader in digital currency interest. Per a survey by Coinformant, an Australian digital currency resources platform, Chile ranked second in the world for new digital currency adoption. 

By 2021, Chile had the highest growth in Google search volume at 707%, with total engagement at 639%. Digital currency owners in the Latin American country make up 2.62% of the total population.

To learn more about central bank digital currencies and some of the design decisions that need to be considered when creating and launching it, read nChain’s CBDC playbook.

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