Colombia Unveils Blueprint for Central Bank Digital Currency (CBDC) and Crypto Regulatory Framework

Colombia’s finance minister announces plans for a Central Bank Digital Currency (CBDC), along with a bill to regulate cryptocurrencies.

Speaking at a conference called “The banking of the future: 100 years later” on October 25, 2023, Colombian finance minister Ricardo Bonilla said that Colombia will have a CBDC, but in order for that to succeed, cryptocurrencies must be regulated.

“We will have a digital currency […] A working group is creating a bill to regulate cryptocurrencies because the function of the Bank of Colombia as the primary issuer cannot be lost”

Ricardo Bonilla; Colombia’s Minister of Finance; October 25, 2023

“We will have a digital currency,” said Bonilla.

“Nowadays, the world is talking about cryptocurrencies, but today cryptocurrencies are not necessarily the best for clear and transparent transactions.

“With respect to cryptocurrencies and the potential of a digital currency, we must start building. In Colombia, we’ve begun building.

“A working group with the Bank of the Republic, the Financial Superintendent, the Ministry of Finance, and Congress is creating a bill to regulate cryptocurrencies because the function of the Bank of the Republic as the primary issuer cannot be lost. It cannot be diluted.

“The central bank will continue to be the primary issuer, and any digital currency must be based on that primary issuer.”

“Everything about this project that we’re building is to show that the central bank will have to have control over whatever happens with respect to cryptocurrencies and the potential to rollout a digital currency”

Ricardo Bonilla; Colombia’s Minister of Finance; October 25, 2023

Colombia’s finance minister added, “We will have a digital currency, and the primary issuer will be the central bank.

“We will have regulation on financial assets, which will include cryptocurrencies.

“The next generations will have the responsibility of developing these new regulations, and we will find ourselves in a world in which coins will have become museum pieces, and we will make more and more financial transactions.”

“You could have a potentially […] darker world where the government decides that units of central bank money can be used to purchase some things, but not other things that it deems less desirable like say ammunition, or drugs, or pornography, or something of the sort“

Eswar Prasad, WEF Annual Meeting of the New Champions, June 2023

Earlier this month, Bank for International Settlements (BIS) general manager Agustin Carstens said that Central Bank Digital Currencies “will sit at the core of the future financial system.”

In October, Carstens said that “people want their money to be digital and programmable.”

Programmability is a key feature of CBDC.

Programmability means banks and governments can program CBDC to restrict undesirable purchases, set expiry dates, and determine where transactions can be made.

Speaking at the World Economic Forum’s (WEF) 14th Annual Meeting of the New Champions, aka “Summer Davos,” in Tianjing, China, Cornell University professor Eswar Prasad said:

“If you think about the benefits of digital money, there are huge potential gains. It’s not just about digital forms of digital currency; you can have programmability — units of central bank currency with expiry dates.

“You could have […] a potentially better — or some people might say a darker world — where the government decides that units of central bank money can be used to purchase some things, but not other things that it deems less desirable like say ammunition, or drugs, or pornography, or something of the sort, and that is very powerful in terms of the use of a CBDC, and I think also extremely dangerous to central banks.”

The International Monetary Fund (IMF) is currently working on a CBDC Handbook for governments and central banks to assist them in their CBDC rollouts, with the first four chapters having been published this month.