RIO DE JANEIRO, BRAZIL – Fábio Araújo, economist and in charge of the Digital Real project within the Central Bank of Brazil (BC), has revealed some details on the prospects the bank is currently considering for implementing a digital version of the Brazilian Real.
According to Araújo, this very complex subject is still being explored by the Central Bank, and therefore the institution has been promoting a number of debates with the population and financial market players about how a CBDC (Central Bank Digital Currency) should be implemented in Brazil, which has a digital payment system, known as Pix.
Accordingly, during the webinar “Cryptoeconomics unfiltered – CBDC,” promoted by Blockchain Hub Brazil (BHB), the economist pointed out that the Digital Real will not come to meet a demand for retail payments, which is already met by Pix.
In this respect, the Central Bank categorizes the Digital Real as a kind of token native to a large information and financial technology ecosystem, which was inaugurated with Pix, will grow with Open Banking, and mature with CBDC.
“Open Banking will create a larger information cycle ecosystem among participants in the domestic financial system and create new services in which CBDC would be a liquidity token, the liquidity point of these new digital financial services that may emerge from Open Banking,” he said.
Digital Real is the BC’s bridge to DeFi
Araújo also pointed out that the digital real is not focused on financial inclusion, which is provided by other digital tools developed by fintechs, digital banks and the Pix.
However, with the Digital Real, the Central Bank plans to enable the building or interconnection of the national financial system with decentralized finance (DeFi) and smart contracts which are the major contributions of bitcoin and cryptocurrency ecosystems, in his opinion.
“We see the DeFi market emerging and providing a new way of presenting financial services that may be much more suitable for the population. There is an ease in contract handling in this environment that you don’t have in the traditional banking environment,” he said.
Therefore, although cryptocurrencies are speculative in nature, the technologies that have emerged from this ecosystem will help set up the financial system of the future, according to Araújo.
“Since this cryptoasset wave began the Central Bank has made it clear that cryptoassets are out of our regulatory scope. They are, in our opinion, a risky asset. We have also spoken out in favor of such system technologies as blockchain and smart contracts. And particularly with the emergence of this DeFi market and Facebook’s intention to release a global currency shows people’s desire to develop a new form of financial service,” Fábio said.
Bringing the crypto environment into the Central Bank
Along these lines Araújo said that the Central Bank intends to bring this cryptoasset innovation environment into the Central Bank and, with it, boost new use cases to enhance the financial services provided to the population.
“We intend to bring these key points of the crypto environment within our regulatory framework, to make something massified and accessible to more people. We intend to do something more standardized, so that people can make use of it on a daily basis. We want to introduce the smart contract and DeFi technologies within our framework, so we may reach a wider public,” he said.