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The federal government of Colombia exposed it has plans to launch a digital currency. One of the functions of this brand-new currency would be to curb tax evasion and boost the traceability of deals made by residents. The proposed step would also be accompanied by constraints on money payments and deals of over 10 million Colombian pesos ($2,400).

Colombia to Launch Its Own Digital Currency

Many nations are now looking to digitize part of their economies in order to much better comprehend and manage the circulation of cash in their economies. The federal government of Colombia is preparing to launch its own digital currency in the future, according to declarations used by Luis Carlos Reyes, head of the DIAN, the Colombian tax authority.

Reyes informed regional news outlet Semana this would be among the propositions of the recently inaugurated president Gustavo Petro in order to curb tax evasion, approximated to be in between 6% and 8% of the GDP of Colombia. On this note, Reyes specified that the function of this digital currency would be to boost the traceability of these deals so merchants cannot avert taxes utilizing money as a payment approach.

On the efficiency of the step, Reyes approximated:

This is comparable to 6 or 8 tax reforms that have actually been made in the nation, with which an optimum of 1% or 1.5% of GDP is gotten.

However, Reyes did not reveal any qualities of the digital currency or the method which it would work together with the conventional payment systems in the nation.

Cash Restrictions

The intro of the digital currency would also be accompanied by other procedures that are presently being studied. One of these procedures is a constraint on payments in money over a particular quantity. Reyes validated this quantity would be 10 million Colombian pesos, or around $2,400.

However, these modifications may interfere with the payment channels of Colombians. While making use of money for payments was decreased throughout the Covid-19 pandemic, money is presently among the primary approaches of payment in Colombia. Statistics from the Central Bank of Colombia reveal that the blood circulation of expenses has actually increased to its greatest number in 17 months.

According to information from the Financial Superintendency, Colombians still choose money as their primary payment approach when spending for transport (94%), groceries (80%), mobile phone top-ups (78%), and lease (77%).

What do you think of the proposition of a digital currency in Colombia and the proposed constraints on money payments? Tell us in the comments area below.

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