A Colombian official has suggested that there may be a national digital currency plan, despite the country’s unexpected economic growth in the second quarter. Luis Carlos Reyes of the Colombian Tax and Customs National Authority claimed that newly elected President Gustavo Petro would seek to create a cryptocurrency in order to stop illicit financial activity such as tax evasion.
The country’s digital currency plans make up part of its new monetary policy measures that aim to improve transparency in financial transactions. A report estimates that tax evasion in Colombia has cheated the country’s gross domestic product out of around 6% to 8% of its potential total.
Reyes pointed out that the creation of a possible digital currency would have a significant impact on user experience. However, he didn’t specify which type of digital currency the Colombian government would like to launch. It could be a central bank digital currency (CBDC) or an asset-backed national currency comparable to the Venezuelan Petro digital currency project that failed.
Hernando Vargas, the technical deputy governor of the central bank of Colombia, discussed the consequences of a retail CBDC for Colombia earlier this year. Cash is Colombia’s preferred medium for low-cost payments, but the official pointed out that there are potential threats from stablecoins and cryptocurrencies in certain situations.
This news comes just after Petro was sworn into office on August 7. Petro has been reported as supporting cryptocurrencies such as Bitcoin (BTC). He suggested in 2017 that the crypto could take power away from the government and give it back to the people. The new president also stated that virtual currency was pure information and energy at the time.