The Central Bank Digital Currency Landscape
Julio Velarde, the president of the Central Reserve Bank of Peru, recently announced that Peru will be diving headfirst into the competitive world of Central Bank Digital Currencies (CBDCs). During an Annual Conference of Executives in Lima, he revealed that the future of payment systems will radically change over the next eight years. According to him, not only the payment system but the entire financial landscape is bound to transform dramatically.
Peru’s Strategic Partnerships
In a bid to not only keep up but to potentially leapfrog other similarly-sized nations, Peru plans to collaborate with the central banks of countries that are already making strides in CBDC development. These countries include India, Singapore, and Hong Kong. Velarde candidly stated, “We won’t be the first… But we don’t want to fall behind.” So, while they might not be the trendsetters, they certainly don’t want to be the last on the digital bandwagon!
Global Interest in CBDCs
It’s not just Peru getting in on the action. The Atlantic Council reports that a whopping 87 countries, which account for over 90% of the world’s GDP, are now exploring CBDCs. Not too long ago, in May 2020, there were only 35 countries even considering the concept. Seven have already launched their digital currencies, with China leading the charge—having processed a staggering 62 billion digital yuan!
Regional Developments
The digital asset wave is washing over Latin America as well. El Salvador made headlines by adopting Bitcoin as legal tender, sparking renewed focus on digital currencies in the region. Meanwhile, Mexico and Brazil are gearing up to implement their own CBDCs by the end of 2023.
Future Prospects
As Peru forges ahead, it’s taking notes from its more advanced peers. The Reserve Bank of India is set to trial its digital rupee by year-end, emphasizing a careful rollout for this “completely new product.” The Monetary Authority of Hong Kong and Singapore’s initiatives also highlight the race to innovate in the digital currency space and not fall behind countries already blazing trails. As CBDCs continue to gain traction, it’ll be interesting to see how Peru navigates its way through this evolving financial landscape.
