Brazil’s Central Bank is taking a big step towards digital finance by testing its central bank digital currency (CBDC) platform, the digital real. The bank has selected a diverse group of 14 local and international participants to take part in the trial phase.
Companies like Microsoft, Banco Inter, 7COMm, Visa, Banco Santander, Itaú Unibanco, BTG Pactual, and Banco Bradesco have been chosen to test digital real’s privacy and programmability features. The pilot scheme, officially launched this year, proposes a digital currency tethered to Brazil’s fiat currency, the real. The digital real would have a controlled supply that would expand over time.
The primary use case under scrutiny will be a delivery versus payment protocol for federal public securities. The roster of participants was unveiled on May 24, following a bid process that involved more than 100 institutions.
Brazil, with its massive population of 214 million, has become a prominent target for major crypto companies. Earlier this year, Binance and Mastercard introduced a prepaid crypto card, and Coinbase expanded its services by collaborating with local payment providers. Recently, the central bank approved a license for Latam Gateway, Binance’s payment provider in Brazil, boosting its operational capabilities in the country.
CBDC sentiment is growing worldwide, with more than 110 countries actively developing their own CBDCs. According to Eugen Kuzin, head of marketing and public relations at the crypto payment ecosystem CoinsPaid, there are benefits and risks associated with CBDCs, and Central Banks need to understand that introducing this new asset class is not a quick process. To encourage broad adoption, the right legislation must be put in place. In general, however, CBDCs are essential for the evolution of the payment ecosystem.