Peru considering CBDC to improve payment system: Former IMF adviser

The Central Reserve Bank of Peru (CRBP) has released a paper that it said will be the first in a series to examine the need, design, and timing of a Peruvian central bank digital currency, reported John Kiff, director of research at the Sovereign Official Digital Association (SODA). His report focuses on issues related to a retail CBDC.

The status quo of competing payment systems in Peru is unsustainable, the CBRP wrote, but the introduction of a CBDC, combined with new policies to improve access and interoperability of existing systems, would help the central bank overcome barriers to financial inclusion and reduce transaction costs. According to the report:

"The objective of a CBDC within the framework of the payment system in Peru is to give access to digital payments to the unbanked population, so it is important to know its characteristics to develop an implementation strategy."

Peru has serious obstacles to overcome. Approximately half of the country's population is unbanked. Three-quarters of the unbanked live in “non-poor” households, but almost 79% of them have no savings. They live mainly in urban areas and almost all of them work informally. Almost all of the unbanked have mobile phones.

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However, the use of digital payments in Peru has increased fivefold since 2015, according to the report.

In Peru, three events have occurred that shed light on where the Peruvian financial system is going hand in hand with blockchain.⛓️

I open:

1⃣ The Central Reserve Bank of Peru published the first document "CBDC: Promoting digital payments in Peru"

— Smooth (, ) | .lens (@blid_one) April 3, 2023

The current report marked the end of the first of five steps in the potential production of a CBDC, according to the report. There was no mention of a timetable for CBDC development. The CBRP also released a 25-question survey of potential users, due April 30.

Peru received technical assistance in preparing the report from the International Monetary Fund under an agreement reached in May 2021. President of the CBRP, Julio Velarde announced in November 2021 that the country would cooperate with India, Singapore and Hong Kong to develop a CBDC.

SODA is an independent technology company providing advisory services on central banking, digital finance and the Web3 industry. Kiff is a former IMF section expert.

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