Like other economies across the world, the Peruvian central bank, Peru’s Central Bank, seeks to build a central bank digital currency (CBDC). Julio Velarde, the company’s president, announced that the currency would be largely used for payments. Due to the current market instability, Velarde agreed that now was not the best time to debut the currency.
Peru to Hop on CBDC Bandwagon
The Reserve Bank of Peru’s president, Julio Velarde, indicated that the organisation was already developing a national central bank digital currency (CBDC). Last week, during the 59th virtual edition of the annual executive conference, the announcement was made. In a digitally oriented future, he believes that the formation of such a currency is essential. Velarde emphasised:
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 still in its early stages of development, Velarde believes it is in the same league as others being developed by economies of comparable size. However, Mexico and Brazil are frequently cited as examples of CBDC advancements in the field.
Peru’s cryptocurrency design appears to be geared toward assisting the payments sector; which, according to Velarde, will be drastically different in eight years. With this work, the country hopes to keep up with other economies in the field. However; Velarde acknowledged that Peru still lacks the necessary resources to complete this project now or face the risk that completing such; a project entails for the Peruvian economy. The head of the central bank believes that now is not the best time to pursue this goal.
Many economic actors in the country were taken aback by the announcement; given that Peru is not known for being particularly welcoming of cryptocurrencies. Because there is no legal framework to support cryptocurrency (or CBDC) activity in its economy; the country is still in its early stages of embracing crypto.
Adopting a CBDC is something that countries such as China are already doing; whereas countries such as El Salvador chose a radically different path, adopting Bitcoin as legal tender.