With the aim to facilitate transactions and mitigate tax evasion, Colombia is planning to introduce a central bank digital currency (CBDC). Head of the Colombian Tax and Customs Office, Luis Carlos Reyes verified the information. However, Reyes didn’t provide any additional information. Moreover, the government plans to prohibit cash transactions for amounts exceeding 10 million Colombian pesos (approx. $2,350). The government will take the action under the a tax reform program backed by President Gustavo Petro,
A central bank digital currency or CBDC, is basically a blockchain-based digital currency which is controlled and regulated by the central banks. Many countries in the world including China, India and Jamaica are among the nations working on their CBDCs.
What Colombia Sets to Achieve With its CBDC?
According to Reyes, one of the key objectives is that the payments will be recorded in an electronic medium everytime payments are made for a certain amount. Colombia is not the only country in Latin America which is working on its CBDCs. Countries such as Brazil, Mexico and Peru are working on their own CBDCs too and even before Colombia.
Ledger Insights quoted Victoria Rodriguez Ceja, the governor of Bank of Mexico, who revealed Mexico is planning a 2025 launch of a digital peso. However, the primary goal will remain faster payments, financial inclusion and interoperability. However, Mexico is running a year behind its 2024 goal as announced by the central bank in January. Brazil’s central bank announced its intention to start testing a digital real from later this year to 2023. It hinted at launching a live CBDC as early as the second half of 2024, as per the Brazilian Report.
An economist at the central bank, stated in a paper published on May 3 for the Bank for International Settlement (BIS), that the purpose of the digital real project is to have financial innovation instead of the real-time payments.