The launch of the digital peso has been postponed by the Bank of Mexico citing delays in developing legal and technological requirements for the digital currency. The MBDC, which was announced by the Mexican government in December 2021, seeks to improve financial inclusion by banking the unbanked of the country.
Digital Peso, the national digital currency of Mexico, is still in its initial developmental phase more than a year after it was announced. President Andres Manuel Lopez Obrador’s (AMLO) government first touted plans to introduce a central bank digital currency (CBDC) in December 2021.
Mexico then announced that it would launch the digital peso in 2024 with the Bank of Mexico, or Banxico, and the National Banking and Securities Commission (CNBV) overseeing the development and regulation of the national cryptocurrency. At the time, the federal government highlighted that this latest generation of payment infrastructure was necessary to improve financial inclusion in the country.
According to the project roadmap, MBDC was planned to be developed in three stages, with the first phase seeing the creation of PagoCel, a platform that will allow users to make bank transfers with the digital peso using their mobile numbers or personal information. The second stage will see the country’s financial institutions, including banks and the stock exchange, participate in the project by issuing a security code for the digital currency to be transferred through Banxico’s Interbank Electronic Payment System (SEPI). In the third and final stage, the central bank will introduce a system that will allow users without bank accounts to transact using digital peso, promising financial inclusion for all.
However, local media are now reporting that Banxico’s General Directorate of Payment Systems and Market Infrastructure, who is incharge of the MBDC, is still working on the legal, administrative and technological requirements for the digital currency. The central bank revealed that it is currently preparing a budget that will help determine a probable date for when the digital peso will be ready for launch. Banxico has allocated 10.22 million pesos (£400,000) this fiscal year for the creation of its digital currency.
Unlike El Salvador, President AMLO highlighted that his government would not consider cryptocurrencies like Bitcoin (BTC) as legal tender. Banxico and the CNBV followed on this by putting out a statement warning financial institutions in the country that they were not authorised to offer any services to the public that involves cryptocurrencies. However, crypto is growing in popularity across Mexico, with reports suggesting that the public is using the assets as a store of value while the cartel is using them to launder money.
In June 2021, Senator Eduardo Murat Hinojosa submitted a document to lawmakers in the country’s lower house of parliament proposing a legal framework to regulate cryptocurrencies. Meanwhile, billionaire entrepreneur Ricardo Salinas Pliego, the founder of Banco Azteca, announced that his bank is working to become the first financial institution in Mexico to accept Bitcoin.
Central banks across the world are developing digital versions of their fiat currencies inspired by the technology behind cryptocurrencies. Although crypto assets like Bitcoin (BTC) and Ethereum (ETH) are decentralised, CBDCs, which are issued by central banks, will be controlled and regulated by the government. According to the Bank of International Settlements (BIS), eight out of ten central banks are exploring digital currencies, while at least 81 countries are currently conducting studies or pilot programs to introduce a CBDC into their respective economies.
Banxico believes that the digital peso will be widely popular among Mexicans due to the country being the second largest recipient of remittances in the world, only behind India. Statistics from the World Bank show that between June 2021 and July 2022, Mexicans sent home £4.3 billion from abroad.