Mexican government announces CBDC for 2024

The government of Mexico has announced the country’s central bank will introduce a central bank digital currency by 2024.

Although the government published its notice in the Bank of Mexico’s name, the central bank has so far made no comment regarding a digital currency.

The statement, posted on the federal government’s @gobiernoMX Twitter account, said: “Banxico gives notice that by 2024 it will have its own digital currency in circulation, in consideration of the utmost importance of these new technologies and the latest generation of payment infrastructures as options of great value to advance financial inclusion in the country.”

Reuters quoted “a senior central bank source” as saying the Twitter announcement was “not official”. The wire service referred to a report Banxico published on December 17 that mentioned the central bank was studying a digital currency.

Reuters appears to be referring to an annual report that the Bank of Mexico publishes on its activities in financial services regulation. In the report, the central bank says it “is working on the study and development of a platform leading to the implementation of a digital currency”, modelled on the existing retail payments system, SPEI. That system has operated since 2004.

The report casts this project as a financial inclusion initiative. The digital currency would also provide “a versatile asset from a technological point view for the implementation of automatisation and programmability mechanisms for the use of financial services”.

However, the central bank does not say when this central bank digital currency will appear.

Disagreement not new

The government of the current president, Andrés Manuel López Obrador, has clashed repeatedly with Banxico and its former governor, Alejandro Diaz de León. The president demanded an early remittance of profits on the central bank’s reserves operations in 2020, which Diaz de León refused.

In the end, the central bank did not make any excess profits for 2020, and thus produced no dividend for the government.

In August 2021, the president told Banxico to transfer Mexico’s new tranche of IMF special drawing rights – worth about $12 billion – to the treasury. Diaz de León told López Obrador the law did not permit such a transaction, and the finance ministry would have to purchase the SDRs from the central bank.

One previous dispute between the presidency and Banxico touched on financial inclusion concerns. A senator from López Obrador’s party proposed a law in late 2020 that would have obliged the central bank to buy up US dollar cash stocks that local banks could not convert. López Obrador had expressed concerns that low-income families were struggling to access US dollars.

Banxico publicly opposed the law, and participated in developing an alternative proposal to expand access to exchange facilities and allow migrants to buy dollars from a public sector bank.

In June, López Obrador said he would not appoint Diaz de León to a new term as governor when his tenure expired at the end of 2021. He first proposed finance minister Arturo Herrera for the post, before replacing him with deputy finance minister Victoria Rodriguez Ceja. She took office as Banxico’s first woman governor on January 1.

López Obrador’s single six-year term ends in October 2024, around the time the central bank would introduce a digital currency.