Colombia Running CBDC Pilot on Cosmos

According to Maghnus Mareneck, co-CEO of Interchain Labs, the Colombian government will be testing a still-unannounced CBDC on the Cosmos network. Colombia aims to target cross-border payments with this new CBDC, which has just emerged from stealth with this announcement.

Colombia Hops Onto the CBDC Bandwagon With Stealth CBDC Pilot

Colombia would be the latest country in Latam to experiment with the creation of a central bank digital currency (CBDC). At an interview with The Street, Interchain Labs co-CEO Maghnus Mareneck revealed that they were working with a consortium of banks and the Colombian government in a joint pilot of this still unnamed currency.

While Mareneck was scant on the details of the CBDC, he did reveal that the currency would target a cross-border payments use case and would run on top of Cosmos using IBC Eureka.

Mareneck reinforced the relevance of leveraging Cosmos and IBC Eureka for this project, as they are part of a technology stack that can be harnessed privately by the Colombian government without relying on public infrastructure.

“Imagine you’re a president and you suffer a hack — you’re going to take the blame. So having technology they can understand and change is the most important thing in terms of the security assumptions,” Mareneck stated. “If your blockchain has validators that are all institutions you trust, then you don’t have to trust anyone else except the people that you’re sending assets to,” he added.

The CBDC would be using private and permissioned validators on top of a public network like Cosmos, and the Colombian government would be able to include more validators, like banking institutions, to expand the network.

Colombia’s system follows the trend established by other financial institutions and banks, which have also chosen this route, avoiding building their systems directly on top of public networks.

With this announcement, the project comes out of stealth, and Colombia joins other countries like Brazil, Peru, and Bolivia in this CBDC and digital currency research.

Read more: De-Dollarization Watch: Bolivia to Launch Digital Currency to Tackle Cross-Border Payments

Read more: Central Bank of Peru Will Develop a Digital Currency