Central Bank Digital Currencies in Latin America
CBDCs in South America: Pilot Projects and Resistance
Central Bank Digital Currencies (CBDCs) are gaining momentum in South America, with countries taking varying approaches to their implementation. While some are well-advanced with their pilot projects, others are hesitant and resistant to the idea. In this article, we explore the current status of CBDCs in South America, with a focus on Brazil, Chile, Uruguay, and Argentina.
CBDCs in Brazil
Brazil is one of the most advanced countries in South America when it comes to the development of a CBDC. The country's central bank has been working on the digital real, which will be a digital version of the national currency. The digital real will be backed by the Reserve Transfer System (STR) and have an emission limit. Private banks will also be able to issue stable coins that will be guaranteed against their balance in digital real.
Chile's study group for CBDC
Chile has created a study group for the creation of a CBDC, and the issuance of a digital currency represents a challenge in terms of credit, privacy, stability, and financial information. The Chilean monetary authority has opened up to the possibility of CBDCs, especially guided by the widespread trend towards digitalization of payments at the international level. A report by the bank said that the currency could help develop a more competitive, strong, and inclusive payment system. However, a final decision requires a deeper analysis of its costs and benefits.
Uruguay's e-Peso
Uruguay has been a pioneer in South America in terms of adopting crypto assets, with the adoption of ATMs for cryptocurrencies. In terms of CBDCs, Uruguay has experimented with the e-Peso, which is similar to a CBDC. The e-Peso is a digital version of the Uruguayan peso that is issued by the central bank and can be used to make payments.
Argentina's mixed signals
Argentina has been sending mixed signals about the development of a CBDC. While President Alberto Fernández expressed his support for digital currencies, Miguel Pesce, the President of the Central Bank of Argentina, has said that a national digital currency could be "very harmful" to the national financial stability. Despite these mixed signals, the country has made some progress in the area of crypto assets, with the adoption of Bitcoin as legal tender in some provinces.
Conclusion
The development of CBDCs in South America is still in its early stages, with some countries being more advanced than others. While Brazil and Chile have taken significant steps towards implementing a CBDC, Uruguay has already experimented with an e-Peso, and Argentina remains hesitant. However, as the trend towards digitalization of payments continues to grow, it is likely that more countries in the region will explore the possibilities of CBDCs.
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