- Among the issuer’s challenges is the implementation of digital payments, as 86% of Mexicans continue to use cash.
- Mexican banking is willing to support Banxico in its central bank digital currency project.
- The Bank of Mexico claims to have all the necessary infrastructure and functionalities to issue its CBDC.
The Bank of Mexico plans to launch its own central bank digital currency (CBDC) and Mexico’s private banking is willing to support the issuer in this project. However, it must first convince the 85% of Mexicans who still use cash of the benefits of electronic money.
During a meeting between the governor of the Bank of Mexico (Banxico), Victoria Rodríguez Ceja, and the president of the Association of Mexican Banks (ABM), Daniel Becker, which took place on February 24, this issue was addressed.
"Extraordinary meeting with the Governor of @Banxico Victoria Rodríguez and @AsocBancosMx to continue building the agenda of a more robust and inclusive bank for the benefit of all Mexicans," Becker wrote on his Twitter account.
"If Banxico determines that the banking opinion can help build better elements or beginnings of a cryptocurrency, count on us," Becker said, quoted by Forbes.
He added that private banking is willing to collaborate to form an alliance from which "a more efficient and robust financial system that reaches Mexicans" emerges.
Banxico Must Establish Clear Objectives
Mexican bankers do not see the issuance of a central bank digital currency in the country as a problem. But they have warned that before launching this monetary alternative, clear objectives must be established.
Banking expects interoperability capacity to increase through the Interbank Electronic Payment System (SPEI). Also consider that a CBDC should in principle seek greater inclusion and lower transaction costs.
Rodríguez Ceja pointed out that all these concerns of the Mexican banking system will be taken into account as the digital currency development plan progresses. The launch of Banxico’s CBDC is scheduled for 2024 if there are no setbacks.
With the support of private Mexican banks, it is expected that the project can move forward more smoothly. Banxico collected most of the proposals of the banking association in a document dated December of last year.
In the document entitled “Payment Strategy of the Bank of Mexico,” the organization suggests that banks should work together with the monetary authorities to “develop functionalities that offer the user payment alternatives at a lower cost, in a more agile and secure way.”
The organization says that banks must "take advantage of the trust" of society in financial institutions to offer a digital currency that "reduces inefficiencies in the provision of financial services."
On the Flipside
- The biggest obstacle to the implementation of the Mexican digital currency is the high use of cash in the economy, especially in the informal sectors.
- About 85% of Mexicans still prefer to use banknotes and coins instead of electronic money.
- Only 5% use cards and electronic payments such as SPEI, according to a survey conducted by Banxico in 2020.
Why You Should Care
- The Bank of Mexico claims to have the necessary infrastructure and functionalities required for the issuance of a CBDC, which would have three fundamental objectives.
The first objective is to initiate a universal banking process that includes all Mexicans with or without bank accounts. The second is to create a faster, more secure, efficient, and interoperable payment system. And finally, to create a digital asset that allows the implementation of various automated functionalities that encourage innovation.