18.08.202209:27 Forex Analysis & Reviews: The Colombian authorities are planning to launch a digital national currency

While bitcoin and ether are adjusting after another bullish rally, the Colombian government has announced its plans to launch its own digital currency. One of the goals of this new currency will be control over the payment of taxes and additional control over transactions made by citizens. Who will seriously use this new "best possible offer" remains a mystery. However, rumors have spread that restrictions will accompany the proposed measure on cash payments and transactions worth more than 10 million Colombian pesos (2,400 US dollars) after introducing a digital national currency.

It is worth noting that many countries are currently seeking to digitize part of their economy to understand better and control cash flows. Someone is sympathetic to all this - thanks to the digital currency, it will be possible to cope much better with the same increase in inflation, smoothing out inflated demand and prices in one sector and stimulating it in another. But also, the digital national currency will allow the government to take full control over the cash flows of citizens.

According to statements by Luis Carlos Reyes, head of DIAN, the Colombian tax authority, the Colombian government plans to launch its digital currency in the near future. Reyes said that this would be one of the proposals of the recently inaugurated President Gustavo Petro to combat tax evasion, which is estimated to be between 6% and 8% of Colombia's GDP. Reyes stated that the purpose of digital currency would also be to track transactions so that sellers could not evade taxes by using cash as a payment method. However, the politician did not disclose any features of the digital currency or how it would work with traditional payment systems in the country.

Some rumors about introducing a digital currency in Colombia will also be accompanied by other measures currently being studied. One of these measures is to limit cash payments over a certain amount. As mentioned above, this amount will be 10 million Colombian pesos, or about $ 2,400. Experts note that such restrictions can seriously disrupt the payment channels of Colombians. Although the use of cash for payments declined during the COVID-19 pandemic, cash is now one of the main payment methods in Colombia. Statistics from the Central Bank of Colombia show that the circulation of banknotes has reached the highest level in 17 months. According to the Financial Authority, Colombians still prefer cash as the main payment method for transport (94%), groceries (80%), mobile phone replenishment (78%), and rent (77%).

And while Colombians are preparing for new changes in the financial system, the bitcoin exchange rate continues to sink gradually. The absence of buyers in the area of $23,180 can greatly affect the further upward prospects of the trading instrument. A smooth bearish reversal of bitcoin, observed since August 11, can only increase the pressure. If there is a further decline in the trading instrument, speculators will probably actively defend the nearest support of $23,180, just below which the area of $22,670 passes; the fall will be lightning fast. In the event of a breakthrough in this area, the $22,180 level will play an equally significant role. Its breakdown will send the trading instrument back to the lows of $21,430 and $20,700. If the demand for bitcoin returns, it is necessary to break above the resistance of $23,680 to build an uptrend. Fixing this range will open up the prospect of returning to the highs of $24,420 and $25,000.

Ether buyers are actively defending $1,820, but there is less and less hope for this level. It will be possible to talk about the resumption of the bullish scenario only after fixing above $1,885, which will open a direct road to $1,950 and $2,030. The $2,146 area will be a further target. With the return of pressure on the trading instrument and the breakdown of $ 1,820, buyers will likely show themselves around $1,740, but larger supports are now being viewed at around $1,651.