Brazil Central Bank Launch Digital Currency Pilot
Brazil’s central bank, Banco Central do Brasil, has announced the launch of a digital currency pilot project, making the country the latest to step up efforts to develop central bank digital currencies (CBDCs).
According to the bank, the programme will seek to replicate the success of its Pix instant payment system and further popularise financial services in the country.
According to Fabio Araujo, an economist at the bank and the initiative’s coordinator, public use of the digital currency will begin at the end of 2024 after a testing phase that will include buying and selling federal public bonds.
He added that the ‘digital real’ will be built on distributed ledger technology (DLT) to support the provision of retail financial services settled through tokenized deposits across the country.
He said: “This could reduce the cost of credit, the cost of improving the return on investments. There is a great potential for new service providers, fintechs, democratising access to the market and offering new services.”
The economist said that the country’s CBDC is not designed to leverage digital payments, wth bank deposits continuing to exist. The key difference is that the CBDC would see deposits registered in a more modern environment so financial institutions do not lose this source of credit generation.
(With inputs from Shikha Singh)
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