September 28, 2022
  • September 28, 2022

Mexico to Launch CBDC by 2025, Bank Governor Says

By on April 24, 2022 0

The governor of the Central Bank of Mexico announced before the Mexican Senate that a deployment of the CBDC is planned by 2025.

Victoria Rodriguez, the central bank governor, said the new sovereign digital currency would bring more citizens into the formal banking sector. “Digital currency aims to generate means of payment aimed at financial inclusion, to expand fast, secure, efficient and interoperable payment options in the economy, and to implement complementary functionalities to (existing) means of payment , such as automation mechanisms, programmability and innovation,” she said. Central bank-issued currency would not replace physical banknotes, but rather increase the current utility of the country’s currency. .

According to Statista, only 38.4% of the Mexican population has a bank account. As The Wall Street Journal reported, the economy is largely dependent on paper money for most transactions, which occur in the informal sector of the economy. The informal sector accounted for 22% of Mexico’s gross domestic product in 2020.

The new announcement also indicates that the central bank has become more open to the possibility of regulating digital currencies, according to Rodriguez, with the primary goal of protecting citizens transacting. “[Several] the groups of central banks, in which Banxico participates, are examining this question [of regulation] to better protect those who participate in the financial system.

The road to the CBDC in Mexico so far

In December 2021, the Central Bank announced that the CBDC would be launched in 2024. Banxico, Mexico’s central bank, began discussions with financial institutions last year regarding technical barriers to launching a backed digital currency. by the state. The bank also outlined a strategy to use elements of its SPEI interbank payment method in development and is working in tandem with the Bank for International Settlements.

In June 2021, Ricardo Salinas Pliego, the third richest person in Mexico, announced infrastructure construction work to accept bitcoin at his bank, Banco Azteca. However, officials from the central bank, finance ministry and securities watchdog said at the time that bitcoin was not legal tender in Mexico and that financial firms could not offer any related products. cryptography. “Although they can be exchanged, they do not serve the function of currency, as their acceptance as a mode of payment is limited, and they do not constitute a good reserve or reference of value,” the officials said.

CBDC is a human right, argues senator

Senator Indira Kempis Martinez introduced a bill earlier this month that calls for government to be responsible for ushering in a new era of digital currency, arguing that government intervention in such matters is a human right for people. Mexican citizens. “The intervention of the Mexican State in the economy must be appreciated and assumed by the different legal operators as a native and inevitable relationship with the discourses of human rights, competitiveness and development.

Kempis used bitcoin to illustrate the power of a decentralized network like bitcoin, while acknowledging that any digital currency introduced need not be decentralized. “As far as protocols are concerned, the computers running on the network, which record the transactions of the road assets, must follow the rules of issuance in order to confine the transactions, and these rules must be established in predetermined protocols”, notes the law Project. “It is possible that new computers will become part of the network. However, this is not a necessary feature.

Kempis argues that establishing the bill as legislation would lay the groundwork for bitcoin to be legal tender.

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