The Mexican government has recently announced that they aim to create their very own Central Bank Digital Currency (CBDC) by the year 2024.
Mexico is joining the growing list of governments worldwide that seek digital currencies of their own. For those that see digital money as the future and thus see this as a positive development, keep in mind that governments will not tolerate competition. This goal to create a digital currency doesn’t mean that the Mexican government is going to embrace decentralized digital money, such as Bitcoin, Ethereum, or XRP. In fact, Mexico’s finance minister, Arturo Herrera, has clearly stated,
“Virtual assets do not constitute legal tender in #México nor are they currencies under the current legal framework.”
A month later, to no surprise, the Mexican Financial Intelligence Unit identified 12 crypto-exchange platforms that they considered working illegally and hinted that they would be investigated for money laundering and financing of terrorism.
Despite the threats from the Mexican government, 12% of Mexicans own decentralized digital money, and about 100 businesses nationwide accept it as payment.
The Mexican central bank, Banco de México, realizes that decentralized cryptocurrencies are a threat to their control of monetary policy. Alternative money puts pressure on a central bank’s ability to devalue its currency to finance the government. If the government cannot force you to utilize their devalued currency, then they lose control.
Blockchain technology has enabled the creation of digital money that is decentralized and under no control of any monetary authority. This is a central bank’s worst nightmare — no control. It exposes their inefficiency and waste, and threatens their whole premise of existence. So in an effort to get out in front of this movement towards decentralized digital money, they will push for their own — one they can control.