The Central Reserve Bank of Peru, the Peruvian central bank, is planning to develop a central bank digital currency (CBDC) like other economies of the world. The announcement was made by its president, Julio Velarde, who stated that the currency would be designed for use primarily in payments. However, Velarde also acknowledged this was not the best time to present the currency due to the current uncertainty in markets.
Peru to Hop on CBDC Bandwagon
Julio Velarde, president of the Reserve Bank of Peru, announced the institution was already working on the creation of a national central bank digital currency (CBDC). The announcement was made last week during the 59th virtual edition of the annual executive summit. He stated that the creation of such a currency is a must in a digitally based future. Velarde stressed:
We have been working on a digital currency. We are in a lot of projects with several central banks: with India, Singapore, Hong Kong and with a lot of central banks, thinking of a digital currency that is going to be the one that will prevail in the future.
While this digital currency is yet in its early stages of development, according to Velarde this puts it in the same class as others being developed by economies of similar size. However, Mexico and Brazil are usually pointed to for CBDC advancements in the area.
Peru’s cryptocurrency design seems to be focused on aiding the payments sector which, according to Velarde, will be radically different in an eight-year period. With this work, the country seeks to keep advancing in the field as other economies are doing. However, Velarde acknowledged that Peru still lacks the necessary resources to complete this project now, or to face the risk that the completion of such a project brings to Peru’s economy. The head of the central bank maintains this is not the ideal time to pursue this goal.
The announcement surprised many economic actors in the country, given that Peru is not known for being a nation especially friendly towards cryptocurrencies. The country is still in its initial stages of embracing crypto, given that there is no legal framework to support cryptocurrency (or CBDC) activity in its economy.
Adopting a CBDC is something that countries like China are already doing, while countries like El Salvador decided to go through a radically different process, adopting Bitcoin as legal tender.
What do you think about Peru starting the development of its own CBDC? Tell us in the comments section below.
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