Victora Rodriguez Ceja the governor of Mexicos Central Bank (Banxico), announced that there will be a Central Bank Digital Currency (CBDC) in circulation by 2025.
- The CBDC will not replace existing fiat, rather it will “expand options for fast, secure, efficient, and interoperable payments in the economy” says Rodriguez. This will expand the utility of the Mexican Peso through “automation mechanisms, programmability, and innovation,” she added.
- A CBDC differs from cryptocurrencies as they work to expand payment options in a nation, not reduce or replace them. Whereas, cryptocurrencies work to replace and reduce the use of fiat currency.
- Mexico’s CBDC will have 3 basic functionalities being; a means of payment, a unit of account and a store of value. Banxico is working alongside the Bank for International Settlements (BIS) to develop their CBDC.
- The announcement of a CBDC opens up the doors for regulation of cryptocurrencies says Rodriguez. She adds that “[Several] central bank groups, in which Banxico participates, are reviewing this issue [being regulation] so as to further protect those participating in the financial system.”
- Although Bitcoin being adopted as legal tender by Mexico was ruled out by president Andrés Obrador, ignoring regulation of crypto could have an adverse effect on the country, seeing as various countries have laid out regulatory frameworks already. This could leave Mexico lagging behind the broader adoption of crypto.
