Banco de México seeks to overcome obstacles to launching its own CBDC

Key facts:
  • One of the challenges of digital payments is that 86% of Mexicans continue to use cash.

  • Analysts believe that if CBDCs are launched in Mexico, private banking could lose its relevance.

Mexico’s private banks have shown their willingness to help develop a central bank digital currency (CBDC) for that country. This was announced during a recent meeting between the President of the Association of Mexican Banks (ABM), Daniel Becker, and the Governor of the Bank of Mexico (Banxico), Victoria Rodriguez Sega.

“If Banxico decides that banking opinion can help build better cryptocurrency elements or beginnings, count on us,” Becker said.

Banking Regulation Willing to cooperate From this alliance emerges “a more efficient and robust financial system that reaches the Mexicans”.

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For Baker and thus for the banks of Mexico, Having a Mexican cryptocurrency is not a problemBut building this alternative must meet clear objectives. Among them, greater interoperability through the Electronic Payment System Interbank (SPEI), as well as increased inclusion and improved transaction costs.

For her part, the Mexican official commented that she will take into account the banking proposal as it progresses in the development of the central bank of the central bank.

Governor and AsocBancos
Daniel Becker, President of the Mexican Banks Association and Governor of Banxico, held a meeting where they discussed the currencies of Mexico’s central banks. source: Twitter.

The positive attitude of traditional financial entities in relation to the Mexican digital currency is a Support policies developed by Banxico. Everything seems to indicate that Mexico will launch a cryptocurrency in 2024, as reported by CriptoNoticias.

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Mexico wants a digital currency for everyone

ABM’s approach to launching a CBDC was already enshrined in the Banxico document, dated December 2021.

In the text, the organization suggests that traditional financial entities along with the authorities should “develop functionality that provides the user with payment alternatives at a lower cost, in a more flexible and secure manner.”

In addition, they consider that banks should “leverage on the trust” they already have from society, and offer a digital currency that “reduces the shortcomings in the provision of financial services.”

In this sense, the Bank of Mexico guarantees it It has an infrastructure with jobs To issue digital currency from a central bank.

There are three goals that lead to the issuance of a CBDC for Mexico. The first is the opening of accounts for individuals who deal with banks and those who do not deal with them, which contributes to financial inclusion. Second, they seek to expand payment possibilities in the existing economy Fast, secure, efficient and interoperable.

And third, they want to have assets that allow the implementation of various functions such as automation mechanisms, and foster innovation.

So far, one of the challenges Mexico faces in its commitment to digital central bank currencies is that the use of cash falls primarily on the informal sector, which could hinder digital currency adoption.

86% of Mexicans continue to use cash As an existing payment method, only 5% use electronic payment methods such as SPEI, according to a 2020 Banxico survey.

Central bank digital currencies will be a problem for the Mexican financial system

The Mexico’s commitment to central bank digital currencies is a problem The current financial system of that country, according to Etienne Luquet, a lawyer who specializes in cryptocurrency.

Luquet considers that Banking will not have a leadership role And it may even disappear, because “there is no interest in having an intermediary if the central bank allocates money to each user,” he told El País newspaper.

He also believes that there will be strong central bank control over the use of digital assets. In the lawyer’s opinion, a central bank could become a “mighty financial intelligence unit” that would allow it to “supervise or freeze accounts, or that CBDCs could only be spent on specific items.”

 

 

 

 

 

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