Bogotá — Cryptocurrencies have had a strong impact due to “the sad history of inflation and mismanagement of monetary policy in almost all Latin American countries”, Ángela Vélez, director for Colombia at the Center for International Private Enterprise (CIPE), tells Bloomberg Línea.
The country director of CIPE, one of the four main institutes of the U.S. National Endowment for Democracy, said however that “it is not clear to what extent cryptocurrencies can replace state-backed currencies”, although she said “they may be beneficial in creating job opportunities and innovation that did not exist before”.
She says the CIPE views positively “all technologies and innovations that emerge naturally from the interaction between private companies, workers and consumers”.
In a recent interview, Colombia’s financial superintendent Jorge Castaño stated that the regulatory pilot program for cryptocurrencies in the country has been “a success”, and that by the end of April the outlines of the regulation to which cryptocurrency exchanges and the financial system will be subjected will be defined.
According to a recent report by payroll and compliance platform Deel, since November 2020 the percentage of internationally contracted individuals receiving payments in cryptocurrencies has increased month-on-month at a rate of 10%.
On that platform alone, payments of $4.7 million were made in December 2021, a 49% increase over the previous month.
The largest withdrawals of cryptocurrency payments were made in Latin America (52%), followed by Europe, the Middle East and Africa (34%), and North America and Asia-Pacific, each with 7%.
Knowledge is Power
During a recent debate entitled ‘The Future of Work in Latin America’, Vélez said that the new, post-pandemic reality “has made it clear that those workers who do not have the capacity and knowledge to use new technologies will find it difficult to grow professionally”.
“Similarly, there are many opportunities for national and regional governments to establish a closer relationship with citizens through new digital technologies. This will also require that citizens be prepared to adopt and use these tools,” Vélez said.
In addition, there is “a very strong relationship between the countries that have been able to adopt technologies and the quality of their democracies”, she added, highlighting Chile, Costa Rica and Uruguay as some examples.
Building Democracy
Vélez says “the quality of democracy in Latin America has been declining in recent decades, mainly through fraudulent electoral processes”, pointing to Venezuela and Nicaragua as examples. “As well as the reduction of civic spaces for the participation of all citizens, and high levels of corruption”.
She believes that “private companies have a critical role in the construction of democratic institutions, through the promotion of transparent economic relations, responsible investments and respect for laws and regulations”.
She also referred to the political shift in some countries in the region, and said that “economic recovery in Latin America depends on private companies having the freedom to promote the common good within the existing legal framework”.
“Governments that impose arbitrary measures on private companies that are disconnected from the economic reality end up negatively affecting democracy and the quality of life of ordinary citizens,” she said.
Even so, democratic processes should not exclude any political force, “no matter what ideology or affection for democracy they have”, she added.
She pointed out that democratic governance is an everyday practice that includes governments, companies and citizens alike, and “to improve it, solid democratic institutions in which the rule of law and the rotation of political power are respected are necessary”.
Translated from the Spanish by Adam Critchley