The Central Bank of Honduras (BCH) is making headway in its efforts to modernize the country’s financial system and tackle existing challenges in payment methods. With the aim of potentially launching its own central bank digital currency (CBDC), BCH has revealed a pilot study and opened a public consultation to gather insights and opinions from interested sectors, professionals, and the general public.

The pilot study, titled “The future of money and payments in Honduras, which route to follow?”, was meticulously crafted by the BCH with technical support from the International Monetary Fund (IMF). It explores potential alternatives for implementing a CBDC in Honduras—a project that aligns with the IMF’s broader campaign to promote CBDCs across Latin America.

One of the primary objectives of the study is to address the country’s challenges in financial inclusion, interoperability, and cross-border payments. Recognizing the limitations in the existing payment system, BCH has proposed the creation of a retail CBDC as the most viable solution. This resonates with the viewpoint of the Bank for International Settlements (BIS), which highlights central bank money as the foundation for the evolution of the monetary system.

To facilitate the launch of the CBDC, BCH is also proposing regulatory changes to the Monetary and Central Bank laws. These amendments would establish the necessary legal framework for the issuance of the CBDC. The outcomes of the public consultation phase, incorporating feedback from various stakeholders, will undergo a comprehensive national debate to shape the final regulatory changes.

Despite exploring potential payment system upgrades, the BCH study dismisses cryptocurrencies like Bitcoin as a viable solution due to their perceived lack of stability, accountability, efficiency, high transaction costs, and slow processing speeds. The Central Bank of Honduras maintains its longstanding stance against Bitcoin and cryptocurrencies in general.

However, the study recognizes that certain aspects of cryptocurrency technology can be utilized for financial innovation. This approach aligns with global trends observed in numerous digital currency initiatives that aim to leverage the strengths of cryptocurrencies while retaining centralized control, diverging from the decentralized philosophy of Bitcoin’s creator, Satoshi Nakamoto.

Interestingly, Honduras has witnessed growing adoption of Bitcoin within its borders. Initiatives like the acceptance of Bitcoin as legal tender in the private city of Próspera on Roatán Island and the establishment of Bitcoin Valley in Santa Lucía highlight the embrace of Bitcoin as a means of payment, independent of government oversight.

As the BCH’s pilot study and public consultation progress, it outlines a clear path towards potential implementation of a central bank digital currency in Honduras. This pivotal step taken by the Central Bank of Honduras not only represents an effort to modernize the financial system but also paves the way for future developments in the digital payments landscape.

Disclaimer: The information provided in this research report is for informational purposes only and should not be interpreted as financial or investment advice. The NFT and cryptocurrency market is highly volatile, and readers should conduct thorough research before making any investment decisions.