South Americas Second-Most Populous Country Considering Central Bank Digital Currency, Says Tax Agency Official

A senior official who oversees Colombia’s financial regulatory and tax collection agency says South America’s second most populous country is exploring the idea of rolling out its own digital currency.

new interview In Semana magazine, Directorate General of Customs and Excises (DIAN) Luis Carlos Reyes says the government of newly elected President Gustavo Petro is considering creating a CBDC or central bank digital currency.

CBDC is a government-backed electronic form of currency issued and regulated by a country’s central bank.

Reyes said the main purpose of creating a CBDC is to curb tax evasion, which is worth 6-8% of the country’s Gross Domestic Product (GDP).

Sales made with cash will not be recorded, so people will not have to pay taxes such as value-added tax (VAT) on those transactions, officials said. He says that using digital Colombian pesos helps avoid tax fraud as all transactions are tracked.

One of the key goals is that once a certain amount of payment is made, it is recorded electronically. This measure helps avoid this type of fraudulent transaction.

The announcement comes as the United Nations Conference on Trade and Development (UNCTD) urges emerging markets to launch digital payment systems, among other policy measures to avoid widespread adoption of cryptocurrencies. .

Government agencies have warned that digital assets pose a threat to monetary sovereignty in developing countries.

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