Setting up Automatic Update for All WordPress Plugins

As I understand WordPress can automatically install all plugin updates by simply adding this code but inside theme and functions.

add_filter( 'auto_update_plugin', '__return_true' );

Can be set also inside config file as I do not like to limit to one theme.

Not in config file, but a simple one page plugin can be coded where we can put that code →
add_filter( 'auto_update_plugin', '__return_true' );

Thank you for your message!
So, we can

  1. create a file like lib-update-inc.php and
  2. place it with the content below and file it in /wp-content/mu-plugins directory
<?php

/**
 *  Plugin Name: Update WordPress
 */

add_filter( 'auto_update_plugin', '__return_true' ); // Updates Plugins
add_filter( 'auto_update_theme', '__return_true' ); // Updates Themes
add_filter( 'auto_update_translation', '__return_true' ); // Updates Translations

?>
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You can put it in plugin directory also. Post more questions related to WP we all can benefit.