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It is proven that the technology and the demand are there for central bodies like the Bank of Mexico (Banxico)can issue a digital currency with the same functionalities as a legal tender, said Othón Moreno, director of policy and studies of payment systems and market infrastructure of the institution.
In a seminar on cryptocurrencies organized by the Union of Mexican Financial Institutions (Unifimex), the director of Banxico specified, however, that with regard to other virtual assets of private companies, these are not backed by any authority and are far from the regulatory scope.
He stressed that in this situation, they have emerged and there is a growing interest in stablecoins The tokens stable, which, unlike other virtual assets, face the problem of volatility with a backing in its monetary equivalent.
In this sense, he highlighted that there is a demand for this functionality provided by stablecoins, and there is no modern central bank that he is not, at least, studying and considering this situation.
“Because then there begins to be a decentralization, an issuance by private entities of elements that have the promise of redemption at par value of a legal tender currency,” he explained.
The official mentioned that whoever can do this in the best way is the monetary authority or a central bank like the Banxico.
“Because it has been doing it for 90 years. Central banks have historically successfully issued their legal tender currencies. We have limited ourselves to doing it physically, but I think it shows that the technology is there, and that the demand is there to be able to issue the same functionalities of a legal tenderin digital version”, he pointed out.
Othón Moreno explained that first they went from precious metal to paper; then from paper to polymer, “and now we are turning into a digital representation of the same thing, which is the Mexican peso.”
It should be remembered that a few weeks ago the federal government revealed on his Twitter account that by 2024 Banxico will have its own digital currency.
A challenge for the central bank
The manager stated that the challenge for the central bank is how to provide the same services that this fraction of the population is looking for when using its stable tokens, but now in a centralized way to make it much more efficient. “In the administrative sense, in giving legal and juridical certainty to these digital units understood as a central liability of the bank.”
He stated that just as the 200 and 500 peso bills represent a liability of the central bank, these digital units that it issues, would also be. “It is transferring those properties that the 20-peso bill has, to its digital equivalent of 20 pesos, given the support it has from the central bank.”
They would rely on the SPEI infrastructure
Othón Moreno referred that this has different objectives such as satisfying the demand that the population is showing for this type of more sophisticated services with respect to its currency; but it will also allow boosting financial inclusion efforts.
“By having this digital version of cash, it will be easier to move this population that today, for whatever reason, has to move in cash,” he said.
He pointed out that financial institutions will have to be an important part of this distribution, reception, transfer and reconversion of digital currency from the central bank to established monetary balances.
He explained that to achieve this, the infrastructure of the Interbank Electronic Payment System (SPEI), which is a referent.
“On this infrastructure, we can assemble the additional elements to strengthen and generate this new digital currency mechanism,” he pointed out.
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