Design and implementation of Peru’s retail central bank digital currency pilot
Abstract
This paper discusses the Central Reserve Bank of Peru’s (BCRP)’s central bank digital currency (CBDC) pilot programme, which set out to test and evaluate retail CBDC as an instrument to promote the adoption and use of digital payments, particularly in areas of low financial inclusion. The paper shows how the BCRP developed a phased approach — encompassing research and assumption testing, with technical assistance from the International Monetary Fund. The design of the pilot is based on a hybrid model where the private sector provides user-facing services while the central bank ensures issuance, governance and oversight. A key feature of this pilot is its offline payment functionality, facilitated through a telecommunication company that operates in remote areas beyond the reach of traditional financial systems. This feature addresses the fact that many people in rural areas do not have access to smartphones. The paper highlights the quasi-experimental design of the pilot, which uses randomised district-level marketing promotions to evaluate the impact on digital payment adoption and cash substitution, among other variables. The paper provides a useful example of a practical approach that allows central banks to obtain information to evaluate the potential of digital currencies to promote access, the use of digital payments, and drive welfare gains in regions with low financial inclusion. This article is also included in The Business & Management Collection which can be accessed at https://hstalks.com/business/.
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Author's Biography
Milton Vega is Deputy Manager of Payments and Financial Infrastructures, at the Central Reserve Bank of Peru, where he is responsible for the regulation and supervision of payment systems, the settlement of monetary operations and the administration of the real-time gross settlement system. Mr Vega played an important role in the enactment of Peru’s Payment and Securities Settlement Systems Law and its recent modernisation, in addition to the Electronic Money Law. He also led the implementation of Peru’s central bank digital currency pilot. His work on the topic of payment systems has been published in a variety of journals.
Elmer Sánchez works at the Central Reserve Bank of Peru as a specialised adviser in the field of payments and financial infrastructures. He has experience in designing and evaluating policy programmes in the financial system and payment ecosystem. Mr Sánchez is part of the team responsible for the development, implementation and evaluation of Peru’s central bank digital currency pilot. He played a key role in designing the gradual implementation scheme — a strategy to facilitate the identification of the pilot’s impact.
Arturo Andía is a specialist in financial infrastructures analysis at the Central Reserve Bank of Peru, with expertise in payment regulation and supervision. He contributed directly to the recent modernisation of Peru’s Payment and Securities Settlement Systems Law and the development of the regulatory framework for the country’s central bank digital currency pilot. Mr Andía also played a pivotal role in issuing the Card Payment Agreements Regulation in Peru and continues to oversee its supervision.
