Here’s why this country’s central bank thinks CBDCs are “unnecessary”

As most of the world’s central banks strive to put the brakes on cryptocurrencies and replace them with central bank digital currency [CBDC], Costa Rica has different plans. Like most, the Banco Central de Costa Rica [Central bank of Costa Rica] has remained cautious in its approach to this asset class. However, he has now called Bitcoin “non-illegal”.

Central Bank President Rodrigo Cubero recently clarified the institution’s position on cryptocurrencies in general.

Cubero said,

“Although the use [of cryptoassets] is licensed in Costa Rica, people who wish to acquire these assets do so at their own risk and expense. This is why it is important that anyone who decides to acquire this type of digital asset is well informed of their characteristics and the risks involved with [trading]. “

It should be noted, however, that if users accumulate losses while trading cryptocurrencies, they will not be able to seek legal aid. This will be the case, especially since the bank has repeatedly expressed concerns about the “high volatility” of the market.

Additionally, Cubero was quick to clarify that cryptocurrencies cannot and will not be used by citizens to pay taxes.

Also, while most countries look forward to taxing citizens’ crypto income, Costa Rica is not considering such plans. Such a move is likely to fuel the global perception of Costa Rica as a fiscally favorable nation.

So when does a CBDC arrive?

Well, according to the bank manager, it would not be “necessary” for the country to develop a CBDC. The national electronic payment system [SNIPE] is already meeting a CBDC’s goals of financial inclusion and safe, fast and inexpensive digital payments, he said.

SNIPE, developed by the central bank, serves to connect the country’s financial entities and public institutions through a private telecommunications network. Instead of developing a new CBDC, the country will add functionality and upgrade SNIPE. This will facilitate currency payments and settlements between fiat colón and USD.

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