Colombia’s central bank, Banco de la Republica, has announced a partnership with Ripple to explore the use of blockchain technology in the country.
Colombia will launch a pilot project to test Ripple’s CBDC platform for high-value payment systems. The country is already using Ripple’s technology for ongoing land distribution efforts.
Banco De La Republica and Ripple Partnership
Ripple said the Central Bank of Colombia will work with the Ministry of Information and Communications Technology (MinTIC) to pilot the Ripples CBDC (Central Bank Digital Currency) platform to help improve its high-value payment system. The initiative is part of a larger blockchain trial phase being carried out by the Ministry of Information and Communications Technology. According to Ripple, its CBDC platform will be trialled and tested in a controlled environment without risking damage to public resources. Colombia’s Minister of Information Technology and Communications said in a statement,
“Potential efficiencies can be assessed through the results obtained using blockchain technology to develop solutions that seek to improve and complement processes in entities in a safe and efficient manner.”
James Wallis, vice president of central banking affairs and CBDC at Ripple, added that he believes the project can clear the way for major transformative advances in the use of blockchain technology in the public sector.
“By harnessing the power of an XRPL-based CBDC platform, this project will pave the way for transformative advancements in the utilization of blockchain technology in the public sector.”
However, the announcement did not say when Colombia plans to launch its own central bank digital currency.
The rise of CBDCs
In simple terms, a CBDC is a digital version of a country’s fiat currency, such as the euro and dollar, or in the case of Colombia, the Colombian peso. Backed by a country’s central bank, a CBDC is a digital asset distinct from cryptocurrencies such as Bitcoin (BTC) and Ethereum (ETH). This is because a CBDC is controlled by a central entity, the central bank.
A total of 120 countries are actively exploring CBDCs, according to the Atlantic Council’s Central Bank Digital Currency Tracker. Of these, 11 countries, including the Bahamas, Jamaica, Antigua and Barbuda, Grenada, and Saint Lucia, have launched their own CBDCs. Another 18 countries are in the pilot phase. These include India, China, Saudi Arabia, Russia, Australia, Iran and several others. Another 32 countries have CBDCs under development. These include the United States of America, Brazil, Germany, Spain, United Kingdom, Norway, Finland, Turkey, Canada, Bhutan, Bahrain, Indonesia, and more.
Colombia and Ripple have worked together before
The collaboration between Colombia and Ripple is not the first time the two have worked together. Last year, the Colombian government partnered with Ripple Labs to launch an initiative to overhaul the government’s land allocation efforts. The project is backed by blockchain development firm Peersyst Technology and Ripple, and will permanently store and verify property ownership on Ripple’s public blockchain. This will help eliminate red tape and make land distribution more equal in the country.
Ripple was launched to help banks and financial institutions move money quickly and without incurring additional fees. Currently, XRP is the sixth largest cryptocurrency in the world.
Colombia’s pro-crypto stance
Colombia Takes Pro-Cryptocurrency Stance Since Election Gustavo Pietro As president in August 2022. The new president is very pro-Bitcoin and has strongly supported cryptocurrencies in his speeches. He also took a proactive approach to cryptocurrencies in general and hinted that he truly believes in the power of digital assets. President Petro has made several pro-Bitcoin statements in the past.
“Bitcoin does away with the seigniorage of the states and the banks. It is a community currency based on the trust of those who transact with it. Since it is based on the blockchain, trust can be measured and grown, hence its strength .”
Not surprisingly, Colombia has several initiatives to embrace cryptocurrencies and blockchain technology.After his election, the government Colombia Launched and confirmed its digital currency plans. The initiative will be developed in cooperation with the country’s central bank. This would make Colombia part of an exclusive group of Latin American countries such as Venezuela and El Salvador that have adopted blockchain technology.
March 2023, Binance announced that it will launch its prepaid cryptocurrency card in Colombia. This will mark the third country in Latin America where Binance has launched crypto cards, after Argentina and Brazil. According to Binance, its new crypto card will allow holders to pay with crypto instead of standard debit or credit cards.
Disclaimer: This article is for informational purposes only. It does not provide or be intended to be used as legal, tax, investment, financial or other advice.