Key facts:
- There are still four steps to complete before the formal issuance of the Peruvian CBDC.
- The goal of the Peruvian CBDC is to promote financial inclusion, something that Bitcoin already does.
The Central Reserve Bank of Peru (BCRP) reported that the investigation stage on what will be its possible digital currency (CBDC) has already ended. Now there are four steps to be completed before its final issuance, with which they intend to alleviate the significant debanking that exists in the country.
In a report published on the website of the Peruvian central bank, the institution specified that the “preparation” stage, as this initial phase was called, was in charge of knowing the possible benefits and risks, as well as use cases and feasible ones. solutions that the CBDC, which could be called “digital sun”, would grant to the local economy.
Once this stage is finished, the bank will continue in the phases of testing assumptions, prototype, pilot test and finally, production. These periods “are sequential and permanently active.” The foregoing, “since a CBDC project requires continuous evaluation”, as they recognized.
This implies the possibility that, during any stage of the CBDC’s constitution process, it may return to previous phases “in search of new solutions”. This means that it is impossible to predict the formal arrival date of this digital currency in the Peruvian economy. Although from the bank they bet on companies and citizens that help promote the early adoption of the currency among the population.
The BCRP clarified that these stages involve joint work between the Peruvian private sector and the public authorities of that country. This is to evaluate “more thoroughly” the possible conceptual and structural problems of the CBDC, on account of promoting the adoption of digital payments, mainly among the unbanked. The remaining stages are for the final issuance of the Peruvian CBDC. Source: Central Bank of Peru.
The CBDC of Peru is a matter that has been discussed since the end of 2021. As CriptoNoticias reported at the time, the president of the Inca monetary entity, Julio Velarde, admitted that they were already working on the development of a digital currency. For this, he said that they were supporting India, Singapore and Hong Kong.
Financial inclusion, the target of the Peruvian CBDC
As recognized by the Peruvian central bank, the main objective of the CBDC is to reduce the high rate of unbanked people in the country, which is around 50% of the entire adult population, according to figures from the institution itself. Of these, 76.6% live in urban areas.
To do this, they will appeal to financial inclusion through the central bank’s digital currency, whose “careful design” could help reduce “some of the barriers” that prevent users from full banking. They maintain that the CBDC “should initially be focused on unbanked people in large cities of the country.”
Likewise, the monetary entity asserted that the CBDC could also allow better interoperability of digital payments in Peru. In fact, they clarified that this currency “would not compete with existing digital payment systems.” In any case, it would seek to “expand access to these services for the unbanked.”
This is important because, despite the fact that digital options for executing payments for goods and services in the Inca nation have grown, the number and total value of these transactions “remains low.” This is compared with other Latin American countries, as revealed by the Central Reserve Bank of Peru.
CBDC adoption should be gradual
The Peruvian monetary institution clarified in its report that the adoption of a CBDC must be gradual, which implies the evaluation of legal and regulatory changes, in addition to the benefits, costs and risks. In addition, it must initially be focused on large cities and based on the use of mobile phones.
The adoption should also be aimed at all genders and age groups, in the opinion of the Peruvian central bank. In addition, the CBDC would have to have an intuitive and easy-to-use interface, at little or no cost, as required by the Inca institution.
What the Inca central bank points out about the CBDC is related to what was shown by the analysis firm Juniper Research.
This company maintains that financial inclusion will come hand in hand with these centralized digital currencies and that the value of payments made with CBDC will reach USD 200 billion annually by 2030, as reported by The Market Times.
Bitcoin already solves the problem of financial inclusion
Starting from the fact that the Peruvian CBDC would seek to correct the problem of financial exclusion, it is good to remember that bitcoin (BTC), the first cryptocurrency, has already been allowed to solve this barrier for several years.
Due to its architecture, BTC is a digital currency that allows anyone with access to a mobile device to become part of a payment system. With it, it is possible to access goods and services by paying with that cryptocurrency. This, at a low cost, quickly and safely.
This payment system is not limited to one country, since international payments can be made with bitcoin. Likewise without limitations, almost immediately and cheaply. And this is a matter that is still being discussed about CBDCs.
Added to this is the fact that Bitcoin is a decentralized currency, which means that nobody or government can have control over it. Contrary to the reality of CBDCs, with which it is even proposed to strengthen supervision over the finances of people who start using them.
For their benefit, Peruvians already know Bitcoin. They have been associated with this currency for a long time, as well as with the other crypto assets that make life in the emerging ecosystem.
In Peru, for example, there are commercial gastronomic establishments that accept payments with BTC, through the Lightning network. And, furthermore, according to the analysis firm Chainalysis, the Inca country is within the top 50 of the nations with the highest adoption of cryptocurrencies, holding the 35th position.
The foregoing suggests that among Peruvians there is already a latent solution for financial inclusion that worries the central bank so much. And already from this perspective, the usefulness of a CBDC could be the subject of debate.
