In March, the Central Reserve Bank of Peru (BCRP) released a report presenting the key considerations for the adoption of a central bank digital currency (CBDC). The paper argued that a CBDC could help Peru deal with its low financial inclusion rate and increase its relatively weak pace of digital payment adoption while addressing the system’s general lack of interoperability. However, a number of structural issues suggest that a CBDC alone might not be enough to promote digital payments at scale.
Like other developing countries, Peru is still a heavily cash-based economy, which is problematic for tax collection, high management costs, and financial inclusion. Although digital payments have grown significantly since the COVID-19 pandemic, cash remains the principal means of payment for the vast majority of the Peruvian population.
From a consumer perspective, the country’s cash affinity can be mainly explained by a general lack of financial inclusion. In 2021, only 49.7% of the adult population possessed a bank account, one of the lowest rates in Latin America. However, as the report indicates, even among this population, cash continues to dominate as the principal means of payment.
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