Peru Considering CBDC to Promote Digital Payments System

John Kiff, the director of research for the Sovereign Official Digital Association, says that the Central Reserve Bank of Peru (CRBP) has released a document that says it will look into the need, structure, and timing of a digital currency. The report focuses on problems with a retail CBDC.

According to the CBRP, Peru’s current situation of competing payment systems is unsustainable. But a CBDC and new rules to make existing systems easier to use and more compatible with each other would help the central bank remove barriers to financial inclusion and lower transaction costs. The report reads:

“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.”

According to the research, Peru faces significant challenges. The country’s population is underbanked by about 50%. Nearly 79% of the unbanked, who comprise three-quarters of the population, do not have any savings. They virtually all have informal jobs and primarily reside in metropolitan areas. The majority of unbanked people have smartphones.

Despite this, the survey said that since 2015, the number of digital payments in Peru has increased by five times.

En el Perú, han ocurrido tres eventos que dan luces de hacia donde va el sistema financiero peruano de la mano de blockchain.⛓️

Abro 🧵:

1⃣ El Banco Central de Reserva del Perú publicó el primer documento “CBDC : Impulsando los pagos digitales en el Perú”

— Blid (🌸, 🌿) | .lens (@blid_one) April 3, 2023

According to the study, the first of five phases in the future development of a CBDC was completed with the release of the present report. There was no mention of a CBDC development schedule. The CBRP also posted a 25-question survey for prospective users due on April 30.

According to a deal made in May 2021, the International Monetary Fund helped Peru with the technical side of making the study. In November 2021, CBRP President Julio Velarde declared that the nation would work with India, Singapore, and Hong Kong to create a CBDC.

A technology-neutral company, SODA, offers advice on central banking, digital finance, and the Web3 sector. Kiff was once an IMF section specialist.