On one side, Bitcoin, Banco de México will have digital currency

2024 is here! The Government of Mexico announced the Bank of Mexico’s digital currency (CBDC or Central Bank Digital Currencies, in English). that will be released in that year.

According to the announcement, the decision responds to the “importance of these new technologies and the next generation payment infrastructure.”

“The Bank of Mexico informs 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,” he reported. the Government of Mexico in their social networks.

On previous occasions, Alejandro Díaz de León, governor of Banxico, has spoken about digital currencies. He has even pointed out that central banks face the challenge of digital money that could lead to economic crises.

“Virtual assets should not be used to satisfy financial obligations or be handled only as currencies, but (they should) be used as currency for legal use, they should have certain properties for exchange but I think they fail as a unit of account value. and inefficient payments of mechanisms, “said Díaz de León at the Michel Camdessus 2021 Central Banking Conference.

Jonathan Heath, deputy governor of the Bank of Mexico, has also referred to digital currencies on previous occasions.

He noted that there is a possibility that CBDCs may enter operations at the end of 2024 in Mexico.

“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 (the CBDC),” he said during a video conference.

He added that although there is the possibility of putting Banco de México’s digital currency on the market, it will not displace banknotes and coins, because in Mexico there is a high rate of informality and low financial inclusion.

“We are going to have the use of paper money as the predominant payment at the national level for a long time, so we do not want to be absent from these technological advances; we are there, we are going to do it and we are going to be working ”, he assured.

What are digital currencies issued by central banks?

A study by BBVA Research establishes that CBDCs are an alternative to cash. These can be of universal access or restricted to a particular group of users, that is, limited to banks or financial institutions.

CBDCs can also be anonymous, as in the case of cash, or identified, as if they were checking accounts. The former are based on tokens and the latter on accounts.

If you wonder what the difference is between a digital currency and a cryptocurrency, BBVA points out that digital currencies backed by central banks may be a reality in the coming years.

Unlike cryptocurrencies, such as Bitcoin and Ethereum, these currencies promise less volatility and greater security.

In addition to these characteristics, digital currencies will have the support of monetary institutions, as would be the case of the digital currency of the Bank of Mexico.

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On one side, Bitcoin, Banco de México will have digital currency

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