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The President of Central Reserve Bank of Peru (CBRP), Julio Velarde Flores, announced in November 2021 that the country would cooperate with India, Singapore and Hong Kong to develop a CBDC.
The Central Reserve Bank of Peru (CBRP) has recently published a report on the need for a well planned Central Bank Digital Currency (CBDC) in boosting the fiat market. Moreover, the country has recorded a huge influx of crypto related businesses with Bitcoin transactions on the rise. In order to maintain a healthy digital economy, the CBRP has collaborated with other global central banks to develop an interoperable CBDC.
Moreover, the rise of stablecoins has significantly reduced the role of most central banks in controlling the financial institutions. Nevertheless, most global central banks are undertaking the CBDC development to fully regain control of their respective economies. Furthermore, the fall of Terra Luna UST, which involved over $40 billion, induced a lot of fear to most global regulators over the ballooning cryptocurrency industry.
Peru on CBDC
The CBRP announced through its official website that it has finalized the research stage of a functional and interoperable CBDC. As a result, the next stages after finalizing the preparation stage include proof of assumptions, designing the prototype, undertaking the pilot program, and finally entering the production process. The CBRP understands a significant portion of the country is unbanked.
“The objective of a CBDC within the framework of the payment system in Peru is to give the unbanked population access to digital payments, so it is important to know their characteristics to prepare an implementation strategy,” the report noted.
Interestingly, three-quarters of the unbanked in Peru live in urban areas and work in informal environments, whereby almost 79 percent of them have no savings. As a result, the CBRP is confident a functional CBDC, which has yet to be announced, will help the unbanked access digital financial services.
Según el documento, una CBDC bien diseñada puede fomentar los pagos digitales, ayudando a reducir las barreras a la inclusión financiera, y promover la interoperabilidad de los pagos digitales en el Perú.
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According to data from the NGO Motiv, Peru is carrying out more than 20 thousand Bitcoin transactions weekly. As a result, the CBRP is confident a highly interoperable CBDC will help build the economy amid rising global inflation.
The President of Central Reserve Bank of Peru (CBRP), Julio Velarde Flores, announced in November 2021 that the country would cooperate with India, Singapore and Hong Kong to develop a CBDC. The CBRP is careful to transition to CBDC in a systematic manner as the fiat system requires a lot of maintenance. However, the adoption of CBDC depends on internet connectivity and smartphone distribution.
“Finally, considering the features of unbanked people, the strategy for CBDC implementation should consider P2P and P2B payments that are potential catalysts for expanding the use and acceptance of a means of payment, considering the replacement of banknotes and coins in the cash-based payment flows,” the CBRP concluded.