Brazil

Focus Area:

Provide a safe environment for innovation using programmable and digital money

Overview:

The Brazilian Central Bank has been working on the concept of Digital Real since 2017 and intends to launched the first public version by 2024.

In March 2023, Brazil’s central bank announced the start of a Digital Real pilot project, aiming to replicate the success of its instant payment system, Pix. The Central Bank of Brazil plans to introduce a central bank digital currency by 2024.

In the Pilot phase, the Central bank wants to evaluate use cases for a digital real and its technological feasibility. The central bank will also test the privacy and programmability functionalities of its platform through a single use case: a delivery versus payment protocol for federal public securities. The testing phase — which will include buying and selling of federal public bonds among individuals — and its subsequent evaluation.

The Central Bank of Brazil has chosen 14 partners to help develop a digital real, Brazil’s central bank digital currency (CBDC).

Motivations:

1. To provide a safe environment for innovation using programmable and digital money
2. Innovation and competition in a digital economy
3. Improved cross-border payments 
4. Reduction in the use of cash 

Financial institutions involved:

Banco do Brasil

Bradesco

Nubank 

Itaú Unibanco

Local stock exchange B3

Crypto exchange Mercado Bitcoin

Santander Brasil

BTG Pactual

Banco Bradesco

Banco Inter

Santander Asset Management

F1RST

Toro CTVM

Bank BV

BTG Bank

Banco ABC

Banco B3

Seguro banks

Brasileiro de Crédito

Technology and Design partners:

Visa

Microsoft

ABC

BS2

ABBC

Ribeirão Preto

BIP

Original

BBChain

7Comm

XP

Basa

Hamsa

LoopiPay

TecBan

Pinbank

Dinamo

Cresol

Banco Arbi

B3 and B3 Digitas

Ntokens

Clear Sale

Foxbit

CPqD

AWS

Parfin

SFCoop: Ailos, Cresol, Sicoob, Sicredi and Unicred

DeFi platform Aave

Design considerations:

The CBDC is going to be based on a distributed ledger technology (DLT) designed to settle wholesale interbank transactions. However, retail access will be enabled through tokenized bank deposits. Tokenized government bonds may be considered as well.

The DLT-based solution will allow for the following:

• The registration of different types of assets
• Decentralization in the provision of products and services
• Integration with systems from other jurisdictions, aiming to enable cross-border payments
• Interoperability with legacy domestic systems
• Retail payments — On-line and, eventually, off-line
• Innovative models development — programmable money, smart contracts, IoT
• Non interest-bearing
• Preventing and combating money laundering

Sources:

https://www.bcb.gov.br/detalhenoticia/17897/nota

https://www.bcb.gov.br/estabilidadefinanceira/real-digital-piloto