The Central Bank of Colombia Is Studying the Creation of a Digital Currency admin January 30, 2022

The Central Bank of Colombia Is Studying the Creation of a Digital Currency

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The Central Bank of Colombia is studying the launch of a digital currency, according to statements made by its manager, Leonardo Villar. The organization is evaluating the launch of this instrument as a means of unifying the different digital wallets in the country, making them interoperable and easier to use for customers.

Central Bank of Colombia Studies Digital Currency Issuance

Many governments in the world are preparing to launch digital currencies in order to compete with cryptocurrencies and other assets. Leonardo Villar, manager of the Central Bank of Colombia, recently announced that the organization was studying the issuance of a digital currency. During a banking convention at Cartagena, Villar explained that the functions and the convenience of such currency were being reviewed by the bank.

While the officer did not offer more details about the structure or nature of the announced currency, he did reveal that one of the experiences the bank is looking closely at, is one that Brazil has endeavored with the pilot and work made towards development of the digital real, the proposed central bank digital currency (CBDC) of the neighboring country.

Brazil’s digital currency will be able to be used as collateral by financial institutions in the country to issue their own stablecoins, maintaining private banks as part of the financial system.

Objectives of a Hypothetical Digital Peso

According to Villar, one of the biggest objectives of the currency would be to make the different digital wallets that are available in the nation interoperable. This current design is said to be very inefficient, and does not allow for users of these wallets to pay for state-related expenses like taxes.

Earlier this week, Luis Carlos Reyes, head of the DIAN, the Colombian tax authority, also talked about the motivations that the issuance of a national digital currency would follow. Reyes explained that the currency would help the country to have more control over transactions and payments. This would ostensibly allow the country to curb tax evasion, which is estimated to represent up to 8% of the GDP of the country.

In the same way, the regulators will be studying to establish limits on the amount of money that can be paid using cash to incentivize the use of digital, trackable alternatives.

What do you think about the studies that the Central Bank of Colombia is executing to launch a digital currency? Tell us in the comments section below.

Sergio is a cryptocurrency journalist based in Venezuela. He describes himself as late to the game, entering the cryptosphere when the price rise happened during December 2017. Having a computer engineering background, living in Venezuela, and being impacted by the cryptocurrency boom at a social level, he offers a different point of view about crypto success and how it helps the unbanked and underserved.

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