Peru teams up with Hong Kong, Singapore and India on digital currency

Julio Velarde, the president of Peru’s central bank, has stated that the country will collaborate with Singapore, India, and Hong Kong to build its own digital currency. 

Peru has chosen to collaborate with the central banks of these countries, primarily because they are far ahead of Peru in terms of the development of a central bank digital currency (CBDC).

Policymakers all over the world are scrambling to keep up with the rapid adoption of cryptocurrencies.

“We won’t be the first because we don’t have the resources to be first and take those risks,” Velarde added, “but we don’t want to be last.”

Nations are considering a CBDC

According to a CBCD tracker, 87 nations (representing more than 90% of the world the world’s gross domestic product) are considering a CBDC at the moment. 

This is a growing trend compared to May 2020, when just 35 countries were exploring a CBDC. A digital currency has now been completely introduced in seven nations. 

Nigeria is the first country outside the Caribbean to establish a CBDC. Around 17 additional nations, including large economies such as China and South Korea, are now in the pilot stage and planning a full launch.

The fact that digitization is currently at full speed is the reason for this very rapid development of CBDCs. 

Future is digital

Central banks must prepare for an unavoidable digital future in which cash’s demand as a means of exchange will most certainly dwindle. 

As a result, the demand for private money to be convertible into central bank digital money is growing.

Other reasons for central banks to want CBDCs, according to PwC, include preserving monetary policy control, transaction traceability, financial inclusion, anti-money laundering, tax objectives, and improved cross-border payments.

CBDCs have been criticized for potentially posing data security and privacy risks, but there is also concern that bank deposits will be reduced, reducing liquidity in the financial system. 

This is why regulators around the world are becoming increasingly concerned about a quickly growing digital market that has evaded sovereign central banks and is attempting to regulate it. 

They are concerned that the market may erode their grip over traditional global banking systems.


Image courtesy of Cointelegraph News/YouTube

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