The Central Bank of Honduras has initiated a two-month consultation regarding the potential implementation of a retail central bank digital currency (CBDC). The primary objectives of such a CBDC would be to enhance financial inclusion and facilitate cross-border payments, particularly remittances.
With support from the International Monetary Fund (IMF), the central bank has released a paper discussing the future of money and payments as it pertains to CBDCs. Honduras, classified as a lower-income nation, is striving to address the issue of financial inclusion. In 2021, only 37.85% of citizens over 15 years old possessed bank accounts. The country significantly relies on family remittances, constituting 25.9% of its GDP.
Given that 81% of the population uses mobile phones, with 72% having access to mobile internet and 52% having broadband access, a CBDC could potentially leverage these technological resources to promote financial inclusion and cross-border payments.
One possible goal of a retail CBDC could be the creation of a central bank retail payment system that operates around the clock and offers instant settlement. While Honduras already has a faster payment system known as ACH PRONTO, which operates between 5 am and 10 pm, this system is privately owned and limited to banks. The central bank has approved reforms to broaden participant inclusion.
Honduras’ financial landscape also involves savings and credit cooperatives. A CBDC might aim to improve interoperability between existing payment systems and offer an opportunity to develop electronic money.
The IMF recommended that Honduras study the CBDC and retail payment advancements of Brazil and India. Brazil has pursued a wholesale CBDC, while India is exploring both retail and wholesale CBDCs. In addition, some Caribbean neighbors of Honduras, including Jamaica, the Bahamas, and the Eastern Caribbean, have already implemented retail CBDCs.
