Chile is inching closer to launching its own digital currency, buoyed by strong public backing for the Central Bank of Chile's (BCCh) initiative. While a firm commitment hasn't been made yet, the BCCh's announcement of Proof-of-Concept (PoC) testing signals a significant step towards a digital peso.

The Central Bank conducted a survey gauging public and industry sentiment on a potential CBDC. The results were overwhelmingly positive, with nearly 90% of respondents expressing support for CBDC pilots. This public endorsement seems to have swayed the BCCh, which was previously unsure about the benefits of a digital peso.

With the wind in its sails, the BCCh is gearing up for initial PoC tests. These initial trials will be conducted internally, allowing the bank to gain valuable experience with digital currency technology before seeking external collaboration for real-world testing and potential rollout.

However, the BCCh doesn't see established cryptocurrencies like Bitcoin (BTC) as major competition for a digital peso. Advisor Alberto Naudon believes these decentralized tokens are unlikely to gain widespread adoption as a mainstream method of payment.

Instead, the BCCh anticipates the real competition to come from stablecoins, digital assets often pegged to the US dollar and backed by large companies. Naudon highlights the "potential for significant mass adoption" of stablecoins due to their inherent characteristics. This resonates with the reality in many Latin American countries, where USD-pegged stablecoins are already more widely used than Bitcoin.

The BCCh's shift in stance reflects a broader global trend. Central banks around the world, including most major players in Latin America, are actively exploring or implementing CBDCs. Chile, in line with this trend, is moving forward with its digital currency project, propelled by public support and a desire to stay at the forefront of financial innovation.