Peru Considering CBDC to Improve Payment System: Former IMF Advisor
According to John Kiff, research director of the Sovereign Official Digital Association, the Central Reserve Bank of Peru (CRBP) has published the first in a series of papers examining the need, design, and timing of Peru’s central bank digital currency. (SODA). The report focuses on retail CBDC challenges.
The current state of a competitive payment system in Peru is untenable, according to the CBRP, but the introduction of a CBDC, combined with new policies to improve access and interoperability of existing systems, will assist the central bank in overcoming barriers to financial inclusion and decline. Transaction fees. “The goal of CBDCs within the framework of Peru’s payment system is to give the unbanked population access to digital payments,” according to the study, “so it is important to know their characteristics in order to prepare an implementation strategy.”
Peru has significant challenges. About half of the country’s population does not have a bank account. Three-quarters of the unbanked are from “non-poor” households, while more than 79% have no savings. They mostly live in the city and almost all work part time. Almost everyone who doesn’t have a bank account has a cell phone.
Nonetheless, use of digital payments in Peru has jumped fivefold since 2015, according to the study. According to the study, the recent report marks the conclusion of the first five processes towards the prospective establishment of a CBDC. There is no mention of the CBDC development schedule. The CBRP is also sending out a 25-question survey to potential users, which is due April 30.
Under the May 2021 agreement, Peru obtained technical support from the International Monetary Fund in the development of the study. In November 2021, CBRP President Julio Velarde stated that the government would work with India, Singapore and Hong Kong to create a CBDC.
SODA is a technology agnostic consulting business specializing in central banking, digital finance and the Web3 sector. Kiff had worked as a specialist for the IMF.