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Seven lessons from the e-Peso pilot plan: The possibility of a Central Bank Digital Currency

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  • Sarmiento, Adolfo

Abstract

The decision to introduce a central bank digital currency (CBDC) is part of the new challenges that central banks are facing as technology keeps moving. The e-Peso pilot plan, implemented between 2017 and 2018, could provide some key findings for central banks. In this sense, we can learn seven lessons from the e-Peso pilot plan: (i) reputation is key for central banks’ decision to introduce a CBDC; (ii) financial inclusion and cultural reasons are the main motivations; (iii) the technological solution as simple as possible; (iv) security aspects and traceable transfers are central for operational risk problems; (v) a token was a good solution for CBDC implementation; (vi) digital money was used for small payments and transfers; and (vii) CBDCs complement the existing means of payment. The conclusions highlight that CBDC choices are based not only on technical considerations but also on the cultural implications money use. The adoption of this new means of payment will be incremental but not reversible.

Suggested Citation

  • Sarmiento, Adolfo, 2022. "Seven lessons from the e-Peso pilot plan: The possibility of a Central Bank Digital Currency," Latin American Journal of Central Banking (previously Monetaria), Elsevier, vol. 3(2).
    • Handle: RePEc:eee:lajcba:v:3:y:2022:i:2:s2666143822000175
    DOI: 10.1016/j.latcb.2022.100062
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    References listed on IDEAS

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    1. Armelius, Hanna & Boel, Paola & Claussen, Carl Andreas & Nessén, Marianne, 2018. "The e-krona and the macroeconomy," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, issue 3, pages 43-65.
    2. John Miedema & Cyrus Minwalla & Martine Warren & Dinesh Shah, 2020. "Designing a CBDC for universal access," Staff Analytical Notes 2020-10, Bank of Canada.
    3. Kumhof, Michael & Noone, Clare, 2018. "Central bank digital currencies - design principles and balance sheet implications," Bank of England working papers 725, Bank of England.
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    5. Raphael A. Auer & Giulio Cornelli & Jon Frost, 2020. "Rise of the Central Bank Digital Currencies: Drivers, Approaches and Technologies," CESifo Working Paper Series 8655, CESifo.
    6. Morales-Resendiz, Raúl & Ponce, Jorge & Picardo, Pablo & Velasco, Andrés & Chen, Bobby & Sanz, León & Guiborg, Gabriela & Segendorff, Björn & Vasquez, José Luis & Arroyo, John & Aguirre, Illich & Hayn, 2021. "Implementing a retail CBDC: Lessons learned and key insights," Latin American Journal of Central Banking (previously Monetaria), Elsevier, vol. 2(1).
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    9. Arauz, Andrés & Garratt, Rodney & Ramos F., Diego F., 2021. "Dinero Electrónico: The rise and fall of Ecuador's central bank digital currency," Latin American Journal of Central Banking (previously Monetaria), Elsevier, vol. 2(2).
    10. Raphael Auer & Giulio Cornelli & Jon Frost, 2020. "Covid-19, cash, and the future of payments," BIS Bulletins 3, Bank for International Settlements.
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    Cited by:

    1. Van Roosebeke, Bert & Defina, Ryan, 2021. "Central Bank Digital Currencies: The Motivation," MPRA Paper 111006, University Library of Munich, Germany.
    2. Daud, Siti Nurazira Mohd & Ahmad, Abd Halim, 2023. "Financial inclusion, economic growth and the role of digital technology," Finance Research Letters, Elsevier, vol. 53(C).

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    More about this item

    Keywords

    Central bank digital currency; CBDC; Central banking; Digital currency; Digital money; Payment systems;
    All these keywords.

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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