Chile cenbank to decide on roll-out of digital currency in 2022

BY Reuters | ECONOMIC | 09/27/21 05:39 PM EDT

SANTIAGO, Sept 27 (Reuters) - Chile's central bank will decide in early 2022 on a strategy for the potential roll-out of its own digital currency, the bank's president said on Monday, as policymakers worldwide seek to keep pace with fast-spreading cryptocurrencies.

Regulators globally are cracking down on digital coins, alarmed at a rapidly expanding market that exceeded a record $2 trillion in April. China on Friday said it was banning all crypto trading and mining.

In a presentation before legislators, central bank president Mario Marcel said he had formed a high-level working group to study a medium-term strategy for minting a "digital peso" in a bid to meet the needs of an "increasingly challenging payments industry."

"From objectives linked to the needs of the public, financial stability and effectiveness of monetary policy, the Central Bank will define, at the beginning of 2022, a proposal with options and requirements for a eventual issuance of a digital peso in Chile," Marcel told lawmakers.

The use of digital payments has soared in Chile, Marcel said, with more than 40% of household consumption channeled through credit cards or similar systems, as well as digital transfers.

Global regulators worry the rise in privately operated currencies could undermine their control of the financial and monetary systems, increase systemic risks, promote financial crime and hurt investors.

Marcel said the working group would critically evaluate risks to Chile's banking system and the efficiency of its monetary policy.

Chile, a comparatively wealthy South American nation, has for decades boasted one of the region's most stable banking and financial industries. (Reporting by Fabian Cambero; writing by Dave Sherwood; Editing by Dan Grebler)

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.

fir_news_article