By
Temitope Olatunji
April 26th, 2024
The proposed CBDC will not replace the Mexican Peso, rather, it will serve as a complement to the existing fiat money.
Mexico’s central bank, Banco de Mexico, through its Governor, Victoria Rodriguez Ceja, is set to launch its Central Bank Digital Currency (CBDC) by 2025, shifting its original timeline by at least 12 months. Speaking in a hearing with the Mexican Senate, Rodriguez said the CBDC is designed to foster a greater financial inclusion among all citizens as it will help expand the existing payment options across the board.
Based on the technology upon which the Mexican CBDC will be built, it is expected to enhance the speed of payment transactions dramatically.
“The digital currency seeks to generate means of payments aimed at financial inclusion, expand options for fast, secure, efficient, and interoperable payments in the economy, and implement complementary functionalities to the (existing) means of payment, such as automation mechanisms, programmability, and innovation.”
Mexico planned to launch its CBDC by 2024 before, however, with the new shift in plans, the Central Bank will surely have more time to perfect its design of the new form of money. Per the stance of Rodriguez, the design of the CBDC is expected to brandish much more value than just as a transfer of value, a move that will be markedly different from some of the digital fiat money alternatives out there.
According to Rodriguez, the proposed CBDC will not replace the Mexican Peso, rather, it will serve as a complement to the existing fiat money. While they will be digital, the Central Bank Digital Currencies will not be designed as cryptocurrencies like Bitcoin (BTC), Rodriguez clarifies. She maintained that while cryptocurrencies are decentralized, the Digital Peso will be centralized and controlled by the government.
Mexico’s apex bank said it is working closely with the Bank of International Settlements (BIS) in the development of the CBDC project.
Banco de Mexico Has the Senate’s Support for its CBDC Development
Mexican Senator, Indira Kempis has put forward a Bill for the acceptance of CBDC in-country, calling it the responsibility of the government to ride along with digital and financial evolution which is the right of all 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,” she submitted.
Based on the technological design of the proposed CBDC and its difference from a typical cryptocurrency, Kempis noted that any introduced digital asset does not need to be decentralized.
“Regarding protocols, computers operating on the network, which record the transactions of road assets, must follow the emission rules in order to confine transactions, and those rules must be established in predetermined protocols,” noted the bill. “There is a possibility that new computers may be part of the network. However, it is not a necessary feature.”
Many nations are working on developing their own CBDC, and while China is at its advanced testing stages, countries like the Bahamas and Nigeria have launched a functional CBDC in operation today.