Colombia Looks at Digital Currency To Solve Tax Evasion Problems

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  • Colombia plans to curb tax evasion with a national digital currency.
  • A digital currency will do great things for the user’s experience: the government states.
  • Newly-elected Colombian president is known for expressing his support for cryptocurrencies.

Colombia plans to curb tax evasion, which takes up about 8% of the country’s GDP, with a national digital currency, according to the head of Colombia’s tax and customs agency, Luis Carlos Reyes.

The plans for this new digital currency form part of Colombia’s new monetary policy measures that are aimed at increasing the transparency of financial institutions. With glaring numbers in terms of tax evasion cases, the local government looks to tap digital currencies to aid in addressing the problem.

Reyes also pointed to the fact that a digital currency will do great things for the user’s experience. He stated that “the creation of a digital currency would make transactions easier for the consumer.”

Reyes never specified what kind of digital currency the Colombian government is looking at. Many believe it is either a central bank digital currency (CBDC) or an asset-backed national currency similar to Venezuela’s Perto digital currency project.

These beliefs probably stem from the fact that the technical governor of the central bank of Colombia, Hernando Vargas, had previously considered implementing a CBDC earlier in the year. He did, however, have concerns about Colombia’s “defense” against the threats that come along with cryptocurrencies and stablecoins.

The announcement of the digital currency comes after Colombia’s new president, Gustavo Petro, was sworn in on August 7. Petro is known for expressing his support for cryptocurrencies like Bitcoin (BTC).

In 2017, Petro even went as far as to call virtual currencies “pure information and therefore energy.” He also believes that cryptos like Bitcoin have the power to remove power from the government and return it to the people.

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