The MDBC is a strategic part of the bank’s vision regarding the future payment scheme (…) We believe that it will be a very important element to promote inclusion”.
Victoria Rodríguez Ceja, Governor of the Bank of Mexico.
The digital currency on which the Bank of Mexico (Banxico) is working may be definitively operated in three years, Victoria Rodríguez Ceja, governor of the central bank, told senators.
During her appearance at the Senate Finance and Public Credit Commission, the banker explained that this currency is one of the actions carried out by the central institution to have greater financial inclusion in the country, adding that it will be an integral part of the monetary base. , so it must meet three qualities: be a means of payment, a unit of account and a store of value.
“It is an electronic record in favor of an end user. (The registry) is the responsibility of the central bank, in the form of a liability, and which constitutes an integral part of the monetary base”, he explained to the senators, who were interested and questioning the issue.
Rodríguez Ceja, who has been governor of Banxico since the beginning of the year, pointed out that the Digital Currency of the Central Bank (MDBC) will be backed by the institution, which gives it certainty in contrast to crypto assets that can be a risk for users. .
“The MDBC is a strategic part of the bank’s vision regarding the future payment scheme. Although it is not intended to be a substitute for current coins and bills, we do believe that it will be a very important element in promoting inclusion,” he stated.
He added that it is designed for both banked and unbanked people.
The digital currency was announced by Banxico at the end of 2021 and is intended to be available to anyone.
The rules for the functioning and operation of a MDBC must be defined by Banxico, who must also guarantee its parity with respect to fiduciary currency.
timely action
“Banxico will act in a timely manner,” he assured once again, but this time before legislators Victoria Rodríguez Ceja, recalling the high levels of inflation that have been reached in recent months.
The central banker explained that Russia’s invasion of Ukraine complicated the outlook for central banks, which are in the process of normalizing monetary policy after the actions implemented in the first year of the pandemic.
“The conflict could have larger implications. These countries are important exporters of some products, such as energy, but also fertilizers (…) if it is extended, there could be some impact. We will be attentive to make the corresponding decisions at the right time”, he said.
He added that the conflict in Europe and the recovery of the economy have brought inflation to historical levels not only in Mexico, but also in other countries, which initially affects families with lower incomes, in addition to affecting growth and country development.
“Given this scenario, the Bank of Mexico has taken measures in a prudent and timely manner,” said Rodríguez Ceja, who added that Banxico’s Governing Board expects inflation to return to the target range of 3% +/- 1 percentage point at early 2024.
The central bank has acted in its last meetings with an increase in its interest rate to try to appease the high levels of inflation that have been registered.
Last March, the Governing Board decided to increase the rate by 50 basis points, to 6.50%, and the increases are expected to continue.
promises autonomy
In March, a controversy broke out after President Andrés Manuel López Obrador went ahead of the Bank of Mexico and announced the increase in the interest rate, which led several to question the autonomy of the central institution when it was learned that it was the Secretary of the Treasury, Rogelio Ramírez de la O, who informed the Federal Executive on the subject.
For this reason, the legislators in the Senate questioned the governor, who assured that this was an isolated event, promising to preserve the autonomy with which the central institution has been managed since its creation.
“It is an obligation, by law, that the Ministry of Finance, which is a very important actor in the economy of our country, participate (in the meetings) and of course, in compliance with what the law indicates, it will continue to participate. This was an isolated event, as the president has pointed out, and we will continue with our work and in compliance with autonomy, trying to bring inflation to its convergence”, he said.