Chile goes forward with CBDC exploration on the example of Brazilian Drex. Central Bank researches the development of digital payments and intends to conduct proof-of-concept experiments.
Economy Chile is rapidly going digital in the payments space, with an average of 374 digital payments per capita annually, five times more than in the years prior, and it comprises a significant portion of GDP.
The Central Bank is centering on financial inclusion, whereby simplified accounts and cheap cards have facilitated widespread digital payments.
However, there are issues with these developments. The innovation has been fast-paced, and this has kept the bank on track as the bank has provided the systems of payment that are safe and reliable, and maintains the prices without fluctuations.
The bank recognizes that the introduction of CBDC would have the potential to increase the efficiency, competition, and safety of the payment ecosystem in spite of the high level of electronic payment usage.
The current status of the Central Bank is exploratory, making a wholesale CBDC proof-of-concept imitating the transfer and settlement of tokenized assets with the help of blockchain.
This tentative experimentation is in line with their directive of not to destabilize the current financial system in a sudden fashion.
Drex of Brazil stimulates the Path of CBDC of Chile.
The fast and rapid implementation of the Drex CBDC in Brazil, which is developed on the basis of its highly successful Pix instant payment system, has impacted the strategy of Chile.
Drex focuses on making open finance accessible by tokenizing to reach scale and savings, investments, and inclusion. This model is being followed by the smaller yet very inclusive financial system in Chile.
The Central Bank of Chile publicly mentions that they do not have a plan to issue a CBDC at the moment, but emphasizes the need to prepare.
They focus on their style, which consists of accumulating technical and operational information in order to make informed decisions in the future.
This gradual progress can also be viewed through the lens of the current fintech regulations, stablecoin regulation, and the changing payment technologies.
New Digital Finance and Regulatory Innovation.
The competition and innovation in Chile are supported by the Fintech Law and current reforms of the Open Finance System.
The Central Bank predicts the expansion of account-to-account (A2A) payments and wants regulatory frameworks that can be used to promote interoperability of infrastructures between the private and public systems.
With the CBDC environment evolving all over the world, Chile is keeping track of the events amid issues such as the embracement of the practice by consumers and its future effect on banking deposits.
The regulatory policy of the Central Bank would be to strike a balance between innovation and stability of the financial system, and the trust of people.
The strategic exploration of CBDC in Chile is an attempt to avoid committing to something untested in the future, as a desire to adopt the new digital financial paradigm.
Being inspired by the work of neighboring experiments, such as those of the Brazilian Drex, Chile is setting itself up carefully for the next generation of payments.
