Friday, September 30, 2022

Colombia Makes Strategic Move to Develop its CBDC

South American megadiverse country, Colombia has joined many other nations in the race for a central bank digital currency (CBDC). It was gathered from Luis Carlos Reyes, a director at DIAN, that the country is exploring various options for developing a CBDC. DIAN is the Colombia tax agency known as the National Administrative Department of Taxes and Customs in English.

The director disclosed this during an interview with a local Colombian magazine, SEMANA. From a statement issued by Luis, he confirmed that the new leadership of the country has a high-interest level in the crypto ecosystem. 

Shortly after their appointment, the new administration considered improving its payment system. They wished to move from the traditional payment method. After much discussion and consideration, they decided to explore the use of a CBDC to issue payment for goods and services. Not only will the CBDC be used in transactions, but also be employed in the reduction of tax evasion.

Combating tax evasion is a major concern for the country as it has recently been on a rampage. The Colombian government is focused on enhancing the capacity to trace transactions which can invariably be achieved on the blockchain. There is a strong belief that once the transactions can be traced, merchants cannot bypass tax.

According to Luis, using CBDC to combat and eradicate tax evasion is equivalent to implementing six to eight tax reforms.

President Gustavo Advocates For Colombia CBDC

Notably, this is the first time the South American nation is publicly discussing its interest in a CBDC. The current president of Colombia Gustavo Petro is assumed to have a personal interest in digital currencies. 

He was elected barely two months ago and since then, has been urging the financial sector to investigate the crypto space further. Introspecting that Colombia is home to many drug barons, Gustavo advised that they drift from the manufacturer of cocaine while tilting toward crypto.

Amongst the many nations conducting research and analysis of CBDC, Australia is one of the most recent. Almost a week ago, the Reserve Bank of Australia (RBA) revealed its intention to launch a CBDC research program.

Victoria Nye
A Blockchain columnist who is enthusiastic about developing a network interface between the real world and the cryptosphere.

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