El Salvador Effect? Guatemala and Honduras Consider Creating Their Own Digital Currencies

Guatemala and Honduras seem to have been seduced by the euphoria that the world is currently experiencing around bitcoin (BTC) and cryptocurrencies.

However, they will not follow in the footsteps of El Salvador, the first country to adopt BTC as legal tender. Rather, they are exploring the idea of issuing their own central bank digital currencies, known as CBDCs, a sort of digital expression of the fiat money we know.

Representatives from the central banks of both Central American nations said they are evaluating the possibility, during a regional economic forum reported by Reuters.

The vice-president of the Central Bank of Guatemala, José Alfredo Blanco, said that they are considering the possibility of issuing a local digital currency called iQuetzal.

For this evaluation, the entity created a committee dedicated to this task six months ago. But Blanco believes that there could still be a long time to go before the adoption of CBDC in Guatemala. “It may take a long time to complete the research phase,” he said.

Wilfredo Cerrato, president of the Honduran central bank, assured that the institution “has recently begun, approved by the board of directors, to do the study to determine the feasibility of conducting a pilot test by issuing its own digital money or a digital currency of the central bank.”

The Honduran executive also considered that the Central American Monetary Council, a body that brings together the central banks of the region, should address the issue of CBDCs in their policies, as individual countries are doing.

A few years ago, the Central Bank of Honduras referred to the absolute absence of regulation for cryptocurrencies in the country, and now seeks to create its own, albeit a CBDC, and seeks to have the issue debated at the regional level.

See also  Facebook plans to include NFT features in Novi's digital wallet

CBDC, on the radar of dozens of countries

In the midst of an increasingly digital world in which bitcoin and cryptocurrencies are gaining ground day by day, the interest of dozens of countries to enter this world is logical.

Neither Guatemala nor Honduras are among the first countries to consider the option of their own CBDC as a gateway to the digitization of their economies. In fact, data from May of this year suggests that 80% of the world’s central banks are heading in the same direction.

As reported by CryptoNews, the firm Bison Trails, which belongs to Coinbase, published a report in May where they broke down that percentage and ensured that even 40% of institutions were already testing.

In a race dominated by China with the progress of its digital yuan, Latin American and Caribbean nations have also been taking important steps. Such is the case of Brazil and especially the Bahamas. According to the firm PwC, the Bahamas’ CBDC is precisely the most advanced on the planet, this newspaper reported last April.