Technology

Central Bank of Chile prefers a digital currency that allows offline payments

Key facts:
  • The Central Bank of Chile expects to start tests with the CBDC at the end of the year.

  • Nine out of 10 central banks are exploring digital currencies, says the BIS.

Chile’s central bank digital currency (CBDC) has some defined characteristics, according to the president of that country’s Central Bank, Rosanna Costa.

Costa indicated that one of the facilities that digital currency must have is that can be used for payments, both online and offline. This was reported during his participation in an activity of the Bank for International Settlements (BIS).

However, Costa also believes that currently there is no technological infrastructure that works efficiently to achieve what she proposes, according to Coindesk.

Additionally, he believes that the system to be implemented should “allow the authorities to trace the transaction later”, while protecting the personal data of the users.

The head of the Chilean financial entity also added that the digital currency must coexist and be convertible with cash and be used by commercial banks. Costa anticipates that the trial period with the CBDC could begin in the last months of this year.

Rosanna Costa
The president of the Central Bank of Chile, Rosanna Costa, reported that in the coming days she will release a document with more details of the Chilean CBDC. Source: Wikipedia.com.

Costa announced that in the next days will release a document in which it will offer more details of the exploration of the Chilean CBDC, although its launch has not yet been decided.

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Last September, CriptoNoticias reported on the creation of a working group focused on generating a digitization strategy for the Chilean economy. The group has among its tasks to evaluate “the objectives, requirements and regulations for the development of a digital currency issued by the Central Bank.”

CBDCs are popular with central banks

Chile is part of a recent BIS study, which determined that nine out of 10 central banks are exploring digital currencies and more than half are developing them or conducting concrete experiments. In particular, work on retail CBDCs has moved into more advanced stages, the financial body said.

One of the reasons why the willingness of countries to develop this type of digital currency they are, first of all, the emergence of stablecoins and other cryptocurrencies, especially in advanced economies, the report noted.

It also highlights that, globally, more than two-thirds of central banks consider that they are likely to issue a retail CBDC in the short or medium term. Work on wholesale CBDCs is increasingly driven by reasons related to the efficiency of cross-border payments.

In Chile they want to give space in the constitution to bitcoin

In addition to the CBDC being studied by the Chilean regulator, from the Constituent Commission for the Association of Cryptotechnologies (also known as ACHICRIP or NGO Bitcoin Chile) they propose the adoption by the state of bitcoin, blockchain and decentralized finance.

The project is divided into three main axes, those are: bitcoin as legal tender, blockchain for public data management and decentralized finance to eliminate inequalityas reported by CriptoNoticias.

The objective behind the plan is that the State adopts these cryptocurrency technologies to solve the problems that the current economic and administrative model has.

It is estimated that the project for the creation of the new Constitution should be ready on July 4. After that, it will be submitted to an exit plebiscite in which Chileans will vote to approve or reject the new Magna Carta.

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