#5: CBDC Motivations, Challenges, and Design Choices- A perspective from Latin America

CBDC Broadcast
Written By Saiesha Pitroda

18th May 2022

With:

| Ludmilla Buteau Allien (Bank of the Republic of Haiti)

| Dr. Adolfo Sarmiento (Central Bank of Uruguay)

In this session, FNA shifts the lens to Latin America to explore the "Inclusion-First" strategy of the region. Guests Ludmilla Buteau Allien (Bank of the Republic of Haiti) and Dr. Adolfo Sarmiento (Central Bank of Uruguay) join us to discuss how retail CBDCs can bridge the gap in regions with high informality and limited banking infrastructure.

We dive into the e-Peso pilot, one of the world's first successful retail CBDC tests, and explore Haiti's "Digital Gourde" ambitions. The conversation centers on how digital money can bypass fragmented legacy systems to reach unbanked populations and drastically reduce the cost of remittances, which account for over 30% of Haiti's GDP.

Key Discussion Points:

  • The Inclusion Mandate: How Haiti aims to leverage its 64% mobile phone penetration to provide financial services to the 68% of its population that remains unbanked.

  • Remittance Reform: Addressing the staggering 19% transaction fees on international transfers and how a CBDC could return millions to the local economy.

  • Lessons from the e-Peso: Dr. Sarmiento shares the seven key findings from Uruguay’s 2017 pilot, emphasizing that simplicity and reputation are more important than complex technology.

  • Formalizing the Economy: The role of CBDCs in tracking and bringing the massive informal sectors typical of Latin American economies into the formal financial fold.

  • Sovereignty vs. Volatility: Maintaining a "trust anchor" in the face of private cryptocurrencies and foreign stablecoin substitution.

     

Watch on Demand: 

Listen on: Spotify | Apple Podcasts | Amazon Music

Resources & Links:

  • Seven lessons from the e-Peso pilot plan: the possibility of a Central Bank Digital Currency Read More > 

  • Evolving payment ecosystems and CBDC: An ecological approach Read More > 

  • Momentum is strengthening for CBDCs (BIS). Read more >

  • HKMA advances e-HKD exploration Read more >

  • FT: Opinion: An American CBDC is not the way to fight China’s financial might Read more >

  • IMF recommends the Bahamas accelerate’ CBDC education & regulatory oversight efforts Read more >

  • Central Bank of Chile prolongs CBDC issuance plans Read more>

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Saiesha Pitroda
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#4: CBDC Motivations, Challenges, and Design Choices- A Perspective from the UK and Canada