The financial institution hopes that the digital real will facilitate the country’s international economic procedures. The technological model that will govern the CBDC project is not yet clearly defined.
In recent days, the Central Bank of Brazil published the guidelines on the development of its digital currency (CBDC). Right now, the world’s banking institutions are working hard to advance alternatives to cash and electronic banking.
The institution is taking a step forward by promoting discussions to accelerate the development of a digital version of the Brazilian real (BRL). They are concerned about innovating payment services due to the rapid digital transformation of the global economy.
The Brazilian monetary authority says that its CBDC project must respond technologically to the dynamics of the country’s current economy.
The central bank’s vision is that the digital real will also improve the country’s current retail payment system and fosters new business models. Likewise, it seeks that the CBDC project helps Brazil participate in regional and global economic scenarios.
Besides, a working group established guidelines to advance the plans to develop the digital real. They include focusing on a system based on smart contracts, the Internet of Things (IoT), and programmable money that the central bank will issue.
The central bank of Brazil is also concerned about protecting the privacy and anonymity of users. At the same time, it highlights that it must combat money laundering and terrorist financing.
The institution says that it will hold discussions with the private sector and civil society before embarking on a schedule for a CBDC project. They envision diagnosing the use cases that can benefit from CBDC and the most appropriate technologies for their implementation.
The Interest in Central Bank Digital Currencies Is Growing
Few Latin American countries are working on issuing their central bank digital currencies. Mexico accompanies Brazil with its interest in advancing with its own CBDC project.
However, around 80% of the world’s banking institutions are exploring the use of a CBDC. Meanwhile, 40% of them are already conducting proofs of concept (PoC).
Banks seem to be realizing the growing global adoption of decentralized cryptocurrencies like Bitcoin and Ether. The head of the National Bank of Australia, Lisa Wade, indicated how banking institutions are interpreting this level of acceptance.
Wade said that more than 100 million people are using cryptocurrencies worldwide. For that reason, she urged countries to create digital versions of their fiat currencies. That way, she explained that banks will not have to use other options that she considers more volatile.
Earlier this year, the Bank for International Settlements (BIS) launched a work program. This plan includes conducting proofs of concept and research on stablecoins and CBDC.
These proofs of concept would allow the BIS to provide central banks with more efficient solutions to their services. This would occur within a cooperative framework between entities, institutions, academics, and providers of financial services from the private sector.
The BIS initiative emerges from its concern to enter the new monetary and financial dynamics related to cryptocurrencies. In this way, it is evident that these types of assets are increasingly gaining prominence in the world economic system.
By Alexander Salazar
