The digital real guidelines were released last year. It is not a cryptocurrency, because it will be guaranteed by the government.
Some features of this virtual currency:
- will be issued by the BC, as an extension of physical currency, with distribution to the public intermediated by banks and payment institutions
- can be exchanged for the traditional real (in banknotes), and vice versa
- The quotation against other currencies will also be the same
- banks will not be allowed to lend these funds to third parties, as is currently the case with the physical real, and then return them to customers
- there will be no remuneration, that is, the resources will not have an automatic correction
- there will be a guarantee of legal, cyber and privacy security in the operations
The coordinator of the digital real at BC, Fábio Araújo, said that the initiative is a step forward in the modernization of the banking and payment system in Brazil. A stage beyond the PIX, for example.
“It’s a whole trajectory of financial inclusion. First you have PIX, with access to digital payment. Then comes the open bankingwhen the financial system starts to offer products that suit you [a chamada personalização dos serviços bancários]. And the digital real would bring efficiency to the implementation of these products, making this inclusion more effective”, he said.
The BC economist also explained that, with the digital real, the government will enable transactions in the new financial market, characterized by digital assets.
Central Bank plans to implement the digital real pilot project in the second half of 2024
These transactions must take place in the virtual environment called Web3.
The new network is managed through public platforms that store information and transactions (blockchains). Data becomes decentralized, leaving the purview of large technology companies. The idea is to democratize and make access cheaper.
Today used mainly for investments and games, Web3 is still in its initial stages.
“[O real digital] it is an expression of the real within this new environment of finance in Web3. The current systems, where PIX records are made, or bank deposits, are centralized systems, they are outside this DLT environment. [banco de dados digital com informações compartilhadas] which are the ‘blockchains’. The real that circulates in the PIX environment cannot enter this environment of digital assets”, highlighted Araújo.
According to the BC, governments of almost 80 countries, which correspond to more than 90% of the world’s GDP, are engaged in digital currency projects.
“This move is part of the digital transformation our society is going through. Everyone is looking to define this space and determine how a central bank digital currency can help bring new functionality to citizens,” he continued.
The pilot project for the second half of 2024 should have only some participants and limited amounts. The BC still does not specify when the digital currency will be available to the entire population, as this depends on the tests being successful.
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The BC real digital coordinator explained that this new digital financial market will enable cost reduction in operationsallowing, for example, the so-called fintechs (small technology companies, or “startups”, that operate in the financial sector) popularize banking products.
In order to gather suggestions from financial institutions, the BC announced, in November last year, an innovation laboratory. 47 proposals were received from 43 companies and eight different countries. Of these, nine were initially chosen. Among them is a DvP model, that is, delivery of a product against payment.
Araújo exemplifies that this service can replace activities that were previously performed by intermediaries with technology
“Everyone has already been through the situation of buying a used car, will receive the title and then transfer. explained.
In the meantime, according to him, one of the parties may be harmed if payment is not made, or the car is not transferred. In a digital environment, the transaction can be closed through a smart contract, which confirms beforehand whether both sides have fulfilled their part.
“You don’t need to hire a person or a service that has a bureaucracy involved. Technology already brings you this possibility. You could do it with a very low cost. Today, you can hire a registration center, but that’s expensive”, he explained.
The BC economist explained that the same logic, of replacing current intermediaries with technology, can be applied to other areas, such as virtual commerce and the internet of things, making operations cheaper.
A smart fridge, for example, could order out-of-stock items without human intervention, and use a digital wallet for payment. With this, there would be no need to register a credit or debit card, eliminating banking costs.
Araújo evaluated that the beginning of the 5G telephony network, by increasing coverage and facilitating the connection of devices, will also favor new technologies.
“When it reduces costs and increases agility, it opens up the potential for creating new businesses, which is what we saw happening with PIX”, said the economist at the Central Bank.
“We hope that we can bring people who are currently outside this market to the credit and investment market. That you have an efficiency gain to be able to take products to a larger portion of the Brazilian population,” he added.
Difference to cryptocurrencies
Another characteristic of the digital currency, according to the BC, is the operations security.
As it is a digital extension of the real, it is guaranteed by the government, and thus distinguishes itself from cryptocurrencies — such as bitcoins.
In 2017, the BC warned of the risk of ‘bubbles’ and ‘financial pyramids’ practices in virtual currencies.
In the case of transfers to other countries, Fabio Araújo, from BC, explained that there are no great advantages over the traditional real, since agreements are already being negotiated for the international PIX.
“The restrictions are more legal, they are not really technological. What each country does for international transactions. In the end, it is much more a regulatory problem”, he explained.