A high-level official has confirmed plans by the Bank of Mexico (Banxico) to launch the digital peso in 2024.
Authorities recognize that a large portion of the Mexican economy still uses cash, due to almost two-thirds of the population not being banked.
Mexico is likely to become one of the first countries in Latin America to join the club of nations with central bank digital currencies (CBDC). The news was confirmed by the Undersecretary of Finance, Gabriel Yorio, when presenting analysis of the use of digital payments in the country and the subsequent decrease of those in cash.
“I think there is a moment in terms of the intensive use of digital platforms, decreased use of cash and eventually I think that Mexico is going to be one of the countries that has one of the first digital currencies,” Yorio commented during the presentation of the Survey of National Financial Education (ENIF).
The official explained that the issuing institute has already been encouraging digital payments through the CoDi platform. “Once you have a digital currency that works like a traditional currency, which is more likely to be used for electronic commerce, it will help consolidate a digital bail bond agenda in Mexico,” he added.
The authorities recognize that a large portion of the Mexican economy still operates through cash, due to the sizeable unbanked population (almost 60% according to INEGI data) that resides in rural areas, far removed from urban centers, and marginalized areas.
The Launch of the Digital Peso in 2024
Banxico plans to launch its digital currency as late as 2024, which will allow more Mexicans to be included in the financial system. If so, Mexico would become one of the first countries to put a CBDC into circulation.
The first country to launch its own digital currency in Latin America, and indeed the world, was The Bahamas, which issued the Sand Dollar. Sweden followed soon after, coining the eKrona. Currently, around 100 CBDC projects worldwide are in different phases of testing and analysis.
The other country in the region to be making progress towards issuing a digital currency is Chile. The South American nation is expected to decide on its launch in early 2023.
Mexico considers it extremely important to adopt blockchain technology as a means to increase financial inclusion and improve the payment system.
“Banxico is pleased to reveal that by 2024 it will have its own digital currency in circulation, considering these new technologies and the next-generation payment infrastructure to be of the utmost importance as options of great value to advance financial inclusion in the country,” the bank said in a statement on its Twitter account on December 29th.
On the Flipside
The recent announcements and plans for the launches of centralized digital currencies come at a critical time for private cryptocurrencies, which have lost some $200 billion in market cap due to a variety of factors, including fears surrounding interest rate hikes by the world’s central banks.