Bank of Mexico to issue a digital currency by 2024

Bank of Mexico to issue a digital currency by 2024

By Sam Grant - min read

The sovereign digital currency will not replace rather will coexist with the Mexican currency 

On Wednesday evening, the government of Mexico shared on Twitter that the Bank of Mexico was looking to launch a digital currency within the next three years. The government considers digital currencies important in advancing the nation's financial position, according to the shared post.

"The Banxico reports that by 2024 it will have its own digital currency in circulation, considering these new technologies and the next-generation payment infrastructure are extremely important as options of great value to advance financial inclusion in the country," the translated tweet read.

The news comes not long after the Bank of Mexico Deputy Governor Jonathan Heath revealed that the bank was exploring the option. In a virtual conference hosted by S&P on Tuesday, Heath noted that the central bank had a roadmap it intended to follow and planned to have the currency in circulation with no hitches before the end of 2024. The bank official noted that Mexico did not want to lag in virtual currency adoption.

"We are working on a project, we even have a timeline where we think that perhaps by the end of 2024 at the latest, we should have it operating perfectly well," Heath revealed.

It will not replace cash

There haven't been many talks around the specifics of the digital currency, but it is safe to presume that it will be begged to the value of the peso, the country's traditional currency. Heath previously noted that the digital currency would not displace traditional currency upon its launch. He explained that Mexico is not yet economically advanced, and as such, it will not be feasible to have the CBDC take the place of cash.

He added that the country had poor financial inclusion, with only a small fraction of the population having the means to leverage traditional banking.

"We're going to have the use of paper money as the predominant payment domestically for a long time, so we don't want to be absent from these technological advances," he said.

This is not the first time the bank has hinted that a CBDC was on the way. Earlier this month, the newly-appointed Governor of the bank, Victoria Rodriguez Ceja, revealed that the financial authorities were weighing up the idea of a digital currency and its launch.

"Authorities at the international level, given the interest that these virtual assets and their evolutions have awakened, have recognised the need and the potential to extend the functionalities of legal tender through the potential implementation of digital currencies issued by the Central Bank," she said at the time.

More countries are taking up CBDCs

 The North American country joins Nigeria (Africa), Sweden (Europe), and China (Asia), which are also looking to deploy their respective digital currencies soon. Other Latin American countries like Peru and Brazil are also said to be in the process of coming up with their digital currencies. The UK, USA, Chile, and India are also reviewing the option, albeit at different stages.

The recent remarks from Heath and Rodriguez Ceja are in stark contrast with an October statement from President Andrés Obrador. Speaking about the financial system and his government's priorities then, the Mexican President suggested that the country will not adopt unorthodox policies and technologies. Obrador added that his government had prioritised tax collection and curbing tax evasion.