The president of the Central Bank of Mexico announced in the Mexican Senate that a CBDC is expected to be launched in 2025.
Central Bank Governor Victoria Rodriguez said the new sovereign digital currency will introduce formal banking to more citizens. “Digital currencies seek to generate payment methods aimed at financial inclusion, expand fast, secure, efficient and interoperable payment methods in the economy, and implement complementary capabilities to (existing) payment methods, such as automated mechanisms, programmability and innovation ,”she says. Currency issued by the central bank will not replace physical paper, but will expand the current utility of the country’s currency.
According to Statista, only 38.4% of the Mexican population has a bank account. As The Wall Street Journal reported, the economy relies heavily on paper money for most transactions, which take place in the informal sector of the economy. In 2020, the informal sector accounted for 22% of Mexico’s GDP.
According to Rodriguez, the new announcement also shows that central banks are becoming more open to the possibility of regulating digital currencies, with the main goal of protecting transacting citizens. “[Several] The central banking group in which Banxico is involved is reviewing the issue [of regulation] to further protect those involved in the financial system. “
Mexico’s road to CBDC so far
In December 2021, the central bank announced that a CBDC would be launched in 2024. Banxico, Mexico’s central bank, began discussions with financial institutions last year about the technical hurdles involved in launching a state-backed digital currency. The bank also described a strategy to use elements of its SPEI interbank payment method in development and is working with the Bank for International Settlements.
In June 2021, Ricardo Salinas Pliego, the third richest man in Mexico, announced the construction of infrastructure at his bank Banco Azteca to accept Bitcoin. However, officials from the central bank, finance ministry and securities regulator said at the time that bitcoin is not legal tender in Mexico and financial firms may not offer cryptocurrency-related products. “While they are convertible, they do not function as money because their acceptance as a form of payment is limited, and they are not a good reserve or reference of value,” the officials said.
Senator believes CBDC is a human right
Senator Indira Kempis Martinez submitted a draft bill earlier this month arguing that the government has a responsibility to usher in a new era of digital currencies, arguing that government interference in such matters is a human right for Mexican citizens. “Mexican government intervention in the economy must be understood and assumed by the various legitimate operators as a natural and inevitable relationship to human rights, competitiveness and development discourses.”
Kempis uses Bitcoin to illustrate the power of a decentralized network like Bitcoin, while acknowledging that any digital currency introduced is not decentralized. “Regarding protocols, computers running on the network that record transactions in road assets must follow emission rules to limit transactions, and these rules must be established in predetermined protocols,” the bill states. “The new computer has the potential to be part of the network. However, this is not a necessary function.”
Kempis believes that establishing the bill as legislation will set the stage for Bitcoin’s legal tender.
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