Chile is making strides towards the launch of a Central Bank Digital Currency (CBDC), with the public showing strong support for the plans. Despite not committing to a CBDC launch yet, the Central Bank of Chile (BCCh) is gearing up to begin Proof-of-Concept (PoC) testing. A survey conducted by the BCCh showed that almost 90% of respondents had a favorable attitude towards CBDC pilots. The main objective of the PoC tests is to gain experience with technologies related to digital currencies. Initial testing will be conducted internally, with external support sought for real-world testing or rollout.
According to Alberto Naudon, an advisor to the central bank, a Chilean CBDC may face competition primarily from stablecoins rather than cryptocurrencies like Bitcoin. He believes that stablecoins, backed by large companies and with the potential for significant mass adoption, are more likely to be competitors to a digital peso. The use of USD-pegged coins is more widespread than Bitcoin in many Latin American countries, indicating that stablecoins have already gained popularity in the region. The BCCh appears to have shifted its position on CBDC policy, moving towards a potential rollout in alignment with other central banks worldwide.
In 2022, the BCCh initiated and then abandoned a CBDC project, questioning the benefits of a digital peso rollout for the nation at that time. However, in 2024, the bank seems to have reversed its decision, changing course based on the positive response to its survey regarding CBDCs. The plan to launch a digital peso is in line with the strategies of most central banks globally, as many countries are either preparing to introduce CBDCs or actively exploring digital fiat currency projects. The surge of interest in CBDCs reflects a broader trend among central banks to modernize their payment systems and adapt to the digital age.
Chile’s central bank President Rosanna Costa has confirmed that plans to continue one of the world’s largest rate-cutting cycles are still on track, despite new global risks being factored into the outlook. The bank’s commitment to extending its rate-cutting cycle demonstrates a resilience to external economic challenges and a determination to support the country’s financial stability. Costa’s remarks suggest that the central bank remains focused on implementing policies that will benefit Chile’s economy and ensure sustainable growth in the face of evolving global uncertainties.
The BCCh’s decision to conduct PoC testing for a potential CBDC indicates a proactive approach to financial innovation and digital transformation. By seeking input from the public and various sectors, the central bank is engaging stakeholders in the development of a digital currency that meets their needs and preferences. The shift in the BCCh’s stance on CBDCs from initial hesitation to current momentum reflects a growing recognition of the benefits of digital currencies in enhancing financial inclusion, efficiency, and security. As Chile progresses towards a potential CBDC launch, it joins a growing number of countries worldwide that are embracing the opportunities offered by digital currencies and exploring new avenues for financial innovation.
