Brazil accelerates the process of digital currency

Translated from: People's Daily

Roberto Campos Neto, President of the Central Bank of Central Bank of Brazil, recently announced that the Central Bank of Brazil will officially launch the digital currency - digital real at the end of 2024. Previously, the Brazilian Central Bank announced the first batch of 14 large and medium-sized financial institutions and companies participating in the digital real pilot project. These institutions and companies will gradually access testing platforms to participate in large-scale wholesale transactions, personal consumption, and tokenization testing of corporate deposits. According to Brazilian media reports, Brazil will advance its digital currency plan in stages, gradually covering a wider audience and usage scenarios.

In August 2020, the Brazilian Central Bank established a working group to study the feasibility of issuing digital currency. In May 2021, the "Digital Currency Guide" was released to clarify and answer some public debates and doubts about digital currencies. This guide specifies that digital real can be used for personal payments, supports offline payments, and protects citizens' personal privacy and bank secrets.

The Brazilian central bank launched the real-time payment system PIX at the end of 2020, and in just two years, it has grown into one of the most commonly used payment tools in Brazil. The Central Bank of Brazilians pointed out in its latest research and assessment on the reform of digital payment methods that with the behavioral changes brought about by the epidemic and the popularity of PIX, Brazilians are using less and less cash in their daily payments. Currently, PIX users have reached nearly 140 million, accounting for 29% of all payment instruments in Brazil in 2022, surpassing credit and debit cards.

The advantage of developing digital currency in Brazil lies in the popularity of the PIX payment system and the improvement of related digital infrastructure. "Fabio Araujo, coordinator of the Brazilian Central Bank's Digital Real Plan, believes that compared to traditional trading methods, digital currency will directly flow from the buyer's digital wallet to the seller's digital wallet, which helps further improve trading efficiency and promote the development of the digital economy.

Rodrigo Enrix, Innovation Director of the Brazilian Central Bank Employee Association, believes that the digital real will be widely used in the programmable field of financial transactions, especially those involving large amounts of funds. Currency programmability refers to the ability to automatically pay transactions based on conditions and rules agreed upon by both parties, such as limiting the purpose of transaction funds and achieving personalized interest rates for different customers. In addition, digital currencies also have traceability characteristics. Arauho stated that the use of digital real is conducive to combating illegal and criminal activities such as financial fraud.

Brazilian media analysis pointed out that the Brazilian central bank's implementation of the digital real also faces some challenges, such as whether independent institutions are needed to regulate and protect relevant data. Tiago Maransky, an investment consultant at an investment consulting firm in Brazil, believes that whether the digital real can develop new features that make consumers more willing to use it is also one of the issues that regulatory authorities need to face.

(Rio de Janeiro, June 12th)

People's Daily (June 13, 2023, 17th edition)