The digital Real might find significant applications in foreign exchange transactions, both nationally and internationally, suggests the central bank
Brazil’s Minister of Economy Paulo Guedes, in a ceremony celebrating the 100 millionth digital savings account opened at Caixa Economica Federal, confirmed that the country will issue its own Central Bank Digital Currency (CBDC).
Thursday’s statement marked the first time the minister openly spoke about the possibility of a sovereign digital currency. He further added that the project is being studied by the Central Bank of Brazil and is the direct consequence of the adoption of PIX, the Brazilian central bank’s instant digital payment system.
“Now that the central bank is autonomous again, it’s also amazing in the digital dimension: Pix, OpenBank, fintech and digital currency. Brazil will have its own digital currency”, Guedes explained. Though he did not provide any more details on the progress in the CBDC project, he explicitly stated that Brazil is “ahead of many countries”.
The Banco Central do Brasil had announced in August that a study group has been set up to explore the possibility of issuing a digital Real. Roberto Campos Neto, the president of the central bank, had explained that Brazil needs an improvement in its currency which will be made possible through Pix, the new federal digital payment system.
“In our case, Pix is very important because from now on, we see the union of an instant, open and interoperable form of payment with an open data system. They will meet somewhere in the future with a currency that has yet to be perfected”, he said.
Though the central bank is yet to disclose the design, technology or give any insights into the development of a digital Real, Campos Neto has already declared that it will go into circulation as early as 2022.
Statements from Banco Central regarding the digital Real suggest that the CBDC would be used mainly in foreign exchange transactions, both nationally and internationally.
The deputy head of the central bank’s information technology department, Aristides Andrade Cavalcante Neto said that it is important that a digital Real be linked to exchange processes.
“The option to perform a Pix from abroad is on Pix’s evolutionary agenda, but not for the next year”, said the director of the Banco Central’s financial system organisation, João Manoel de Mello.
Though the idea of a CBDC is being floated for the first time by the Economy Minister, Guedes has been a pioneer in digitising and modernising the Brazilian Economy. He recently announced Brazil’s plans on an IPO of the newly created digital bank of Caixa Economica Federal. Brazil is also closer than ever to securing a place for itself in the Organisation for Economic Co-operation and Development (OECD). The country’s central bank’s instant digital payment system also recorded its first transactions earlier this week.