Chile’s Central Bank Considers CBDC as a Solution for DLT Settlement Challenges

The Central Bank of Chile has revealed plans to expand its research into a prospective wholesale central bank digital currency (CBDC), inspired by Brazil’s Drex initiative. Although the project remains in the exploratory phase, Chile’s central bank clarified that it does not represent a concrete decision to launch a CBDC; instead, it is intended to provide hands-on experience with the underlying technology. The envisioned CBDC would be used to streamline the settlement of tokenized assets, especially in decentralized ledger technology (DLT) environments like those utilized for government bond issuance. Achieving this would require effective integration between the central bank’s internal systems and external DLT networks—a technical challenge Chile intends to tackle through a Proof of Concept (PoC) experiment.

During a recent presentation in the UK, Central Bank Governor Rosanna Costa described how the project would simulate the movement of tokenized assets among market actors on a blockchain platform, using the CBDC for settlement. Costa explained that the main objective is to pinpoint operational and technical shortcomings while building the central bank’s expertise. This initiative mirrors a global trend, as a 2022 survey from the Bank for International Settlements (BIS) indicated that more than 93% of central banks are evaluating CBDCs. Chile’s plan also supports the broader ambition of reinforcing financial systems in the face of new technologies, all while safeguarding stability and resilience.

The wholesale CBDC under consideration in Chile would not directly affect consumers, for whom the Chilean Peso remains the standard currency. However, the initiative highlights the rising perception of CBDCs as valuable instruments for advancing financial infrastructure. In 2023, the Central Bank of Chile moved forward with regulations for digital assets, including stablecoins, via its Fintech Law. This legislation empowers the central bank to oversee the prudential workings of stablecoins issued locally. Nevertheless, the stipulation that stablecoin issuers must be registered within Chile creates obstacles for overseeing major global stablecoins such as

and , which have a dominant market presence.

The Drex project in Brazil, which Chile is using as a reference, has entered its second development phase. Under the leadership of Governor Roberto Campos Neto, Brazil’s central bank is experimenting with integrating decentralized finance (DeFi) features into the CBDC to address the complex issues of decentralization, privacy, and programmability. Formerly known as the Brazilian digital real, Drex is being structured to embed tokenization within banks’ balance sheets. The central bank is also making progress on its Open Finance program, aiming to increase competition and provide users with more payment alternatives, including CBDCs. The project’s initial phase prioritized decentralization, while the current phase is focused on

transactions, such as liquidity pools for government securities and facilitating international trade finance.

At the same time, developing economies are increasingly considering CBDCs as mechanisms for enhancing financial inclusion. Recent research published in the Journal of Macroeconomics suggests that retail CBDCs could encourage individuals who are unbanked to establish bank accounts, thereby boosting deposit supply and expanding lending in the broader economy. The study emphasizes that in low-income and developing nations—where a significant portion of residents do not have bank accounts—CBDCs could drive greater financial inclusion, provided they are structured to ensure privacy, efficiency, and potentially better returns than traditional savings. This is in line with the strategic priorities of multiple central banks in Latin America and beyond, which view CBDCs as tools to reinforce monetary authority and update financial infrastructure.

As central banks worldwide push forward with CBDC exploration, they continue to face hurdles related to privacy, interoperability, and regulation. For example, both the European Central Bank and the Bank of England are investigating privacy safeguards and restrictions on CBDC holdings to avoid undermining conventional banks. Although most central banks have not announced firm launch dates for retail CBDCs, momentum is building, and many expect substantial progress by 2025, as countries finalize system designs and begin pilot programs.

In summary, Chile’s exploration of a wholesale CBDC is part of a larger international movement toward digital finance. By learning from Brazil’s example and adhering to international best practices, Chile aims to be a leader in CBDC development while prioritizing the security and stability of its financial sector.