As of June 2024, more than 98% of the world’s central banks were researching, testing, or implementing their own digital currencies, according to the International Monetary Fund (IMF).
Mexico is not immune to this transformation. In 2021, Banxico (Mexico’s Central Bank) announced the development of the digital peso, with the stated goal of strengthening financial inclusion. However, the project has seen little progress, while the private financial sector is speeding ahead. Bank of America, JPMorgan, Citigroup, and other global institutions are already exploring their own stablecoins to reduce friction in cross-border payments. Meanwhile, in Latin America, Brazil has achieved massive adoption of PIX — its instant payment system promoted by the government, the regulator, and commercial banks — which, despite facing recent cybersecurity challenges, remains a benchmark for innovation and inclusion in the region. So, how should Mexico respond?
The emergence of private stablecoins — such as JPM Coin or PayPal’s recent initiative with its PYUSD stablecoin — represents a growing challenge for central banks and financial regulators. Although adoption is still in its early stages, these digital currencies, particularly those backed by U.S. dollars, could gain traction as payment methods in digital and cross-border ecosystems. In this scenario, they could compete with local currencies, especially in specific niches like digital commerce or remittances.
In this context, the recent launch of PayPal World — an initiative that aims to connect up to two billion users through interoperability with local digital wallets like Mercado Pago — also represents a turning point in cross-border payments. In a region where transfer fees can exceed 30% of the amount sent and manual processes cause delays and uncertainty, this platform could significantly reduce friction and boost regional e-commerce.
Although cash still predominates in countries like Mexico — with usage falling from 94.5% to 83.8% between 2018 and 2023, according to INEGI — these digital currencies and new forms of money transfers raise a key question for regulators: how can the sovereignty of national currency be preserved in an increasingly digital economy?
Faced with this scenario, Banxico must assess this risk seriously. As highlighted in a 2024 report by the Atlantic Council, one of the dangers of not having a competitive CBDC is losing control over the payment system and the financial data that supports public policy. In addition, widespread use of dollar-backed stablecoins could reinforce the digital dollarization of the economy, reducing the central bank’s ability to maneuver.
Financial inclusion: an outstanding debt
In Mexico, the promise of the digital peso has been tied to financial inclusion. However, this transformation will only be possible with a coordinated effort among three key players: the government, the regulator, and commercial banks. So far, that convergence has been limited.
With 55% of the workforce in informal employment and millions of people outside the formal financial system, digitalization alone will not guarantee inclusion. Universal access to digital infrastructure (connectivity, devices, financial education) and user trust are essential conditions.
The Brazilian case offers useful lessons: PIX was driven by the Central Bank of Brazil, but with strong participation from the federal government and an aggressive adoption strategy by banks and fintechs. Today, more than 70% of Brazilian adults use PIX — even in rural areas.
A concrete example of the potential of a well-implemented CBDC is the JAM‑DEX project in Jamaica, developed in collaboration by the National Commercial Bank of Jamaica (NCBJ), the Bank of Jamaica (BOJ), the Ministry of Finance, and Baufest, who formed a multidisciplinary team to create a digital wallet (Lynk) on which JAM‑DEX was built, increasing financial inclusion by approximately 200%.
This case reveals several relevant lessons for Mexico: the importance of effective collaboration between the central bank, commercial banking, government, and a technology partner; the value of an agile, user-centered launch; and the real possibility of boosting financial inclusion even in economies with high levels of informality.
What is the opportunity for Mexico?
Mexico still has a window of opportunity. A well-designed digital peso can help reduce informality, facilitate access to formal credit, and improve tax collection. But it requires a clear vision, institutional leadership, and a narrative that clearly explains its usefulness to citizens.
The digital peso should not compete with other solutions such as CoDi, digital wallets, or fintechs, but rather integrate with them. Its comparative advantage must be security, legal backing, and total interoperability. In that sense, the government must define public policies that not only drive technological development but also create real incentives for economic actors — especially small and medium-sized enterprises (SMEs) — to adopt the system.
Monetary disruption is a reality. The question is not whether Mexico should respond, but how and how fast. If the country fails to make strategic decisions, it risks falling behind its regional peers and losing monetary sovereignty to global players.
The future of money will be digital. But it must also be inclusive, secure, and sovereign.
By Luis Battilana, Country Manager of Mexico & Financial Industry Services Head at Baufest.
