Peru’s Central Reserve Bank (BCRP) has partnered with Viettel Peru to launch a pilot program for a Central Bank Digital Currency (CBDC), marking a significant step towards modernizing the country’s financial infrastructure.
Kickoff of the CBDC Pilot Program
On July 17, the Central Reserve Bank of Peru (BCRP) announced that Viettel Peru S.A.C. would be the inaugural participant in a year-long pilot program aimed at integrating digital currency into the nation’s financial system. This initiative is designed to improve the financial ecosystem and modernize payment systems in Peru.
Objectives and Collaboration
The pilot program will involve collaboration with various stakeholders to ensure that the design and functionality of the CBDC align with the BCRP’s requirements. This collaborative approach aims to enhance user adoption and address potential barriers to entry, ensuring a smooth transition to digital currency.
Selection Process and Official Resolution
The selection of Viettel Peru was conducted through a rigorous process outlined in Circular No. 0011-2024-BCRP. Following this process, the BCRP issued Resolution No. 0009-2024-BCRP, officially naming Viettel Peru S.A.C. as the participant in the first digital money pilot.
Insights from BCRP’s 2023 Digital Currency Report
In March 2023, the BCRP published a report exploring the potential adoption of a CBDC. The report described the digital currency as a central bank liability used by the public as money, which could complement existing payment instruments like banknotes and coins.
Peru faces significant challenges in transitioning from a cash-based economy to a digital one, including low financial inclusion and high payment service costs. The report emphasized that addressing these challenges is crucial for increasing digital payments among the unbanked population and building greater trust in the payment systems.
Policy Options for Financial Modernization
The BCRP report considered three options for addressing these challenges: maintaining the status quo, improving access and interoperability of existing payment systems, and introducing a CBDC. The report concluded that maintaining the status quo is not viable, and that improving existing systems and introducing a CBDC are complementary strategies.
Anticipated Benefits of a CBDC
The introduction of a digital currency is expected to enhance Peru’s payment landscape with features such as instantaneous and final payments, universal accessibility, and multiple use cases. This innovation aims to modernize the financial system, making it more efficient and inclusive.
Conclusion
The launch of the CBDC pilot program with Viettel Peru marks a significant milestone for Peru’s financial system. By integrating digital currency, the BCRP aims to address existing challenges, enhance financial inclusion, and build a more modern, efficient payment infrastructure. The outcomes of this pilot program will be closely watched as they could set the stage for broader adoption of digital currency in Peru.
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