Colombia Plans to Introduce Central Bank Digital Currency (CBDC)

The government of Colombia has plans to introduce a Central Bank Digital Currency (CBDC). This new currency would have several goals, including reducing tax evasion and improving the traceability of citizen transactions. The proposed bill would also include restrictions on cash payments and transactions worth more than 10 million Colombian pesos ($2,400). CBDC For Better Traceability According to Reyes, this would be one of President Gustavo Petro’s recommendations to reduce tax evasion, estimated to amount to between 6% and 8% of Colombia’s GDP. Reyes mentioned that the goal of this digital currency would be to improve the traceability of these transactions so that businesses cannot escape taxes by accepting cash as a form of payment. Reyes remained mum regarding the characteristics of the virtual currency or how it will integrate with the nation’s established payment methods. Restricting Cash Payments The adoption of the digital currency would be complemented by additional policies that are now under consideration. Restricting cash payments over a specific amount is one of these measures. This sum, according to Reyes, will be 10 million Colombian pesos, or roughly $2,400. However, these modifications can interfere with Colombians’ payment methods. Although the Covid-19 pandemic limited cash usage for purchases, money is still one of Colombia’s primary payment options today. The Central Bank of Colombia’s statistics indicates...