Brazil’s digital bank generated 64 million users due to COVID

Brazil’s digital bank generated 64 million users due to COVID

The country to launch IPO of the digital bank in order to attract investors

Paulo Guedes, Brazil’s Minister of Economy, confirmed that the country “is about to” join the Organization for Economic Cooperation and Development (OECD) during an online event yesterday. The Minister further explained that the Brazilian Government plans to launch an initial public offering of shares (IPO) for the newly-created digital bank.

The digital bank was created in the wake of the pandemic to enable the Brazilian Government to distribute financial aid to more than 64 million Brazilians spread across the country.  Guedes, while speaking at the Milken Institute Global Conference, stated that the bank is now looking to attract new investors for the country through their latest venture.

The minister explained that a digital bank created by the state-owned Caixa Econômica Federal plays a significant role in the country’s privatisation plans. COVID-19 led the government to spend heavily on economic re-correction and financial aid, among other measures to combat the adverse effects of the crisis on the citizens. The largest part of the financial support was spent in the form of emergency payments for low-income Brazilians.

Caxia, guided by its newly-found digital bank, played an important role in identifying and delivering governmental payments to the beneficiaries. The minister of the economy further explained to the audience that the initiative, which generated a digital bank with 64 million users, is opening up market opportunities.

According to Reuters, Guedes says that Caixa’s customer base has led to plans for an IPO for the digital bank, which was created “in six months” to pay government benefits, “We digitalized 64 million people. How much is a bank with 64 million people worth? Low-income people, but people that were (bank-registered) for the very first time, so they are going to be loyal for the rest of their lives.”

Brazilian website InfoMoney reported that Guedes also said that the Central Bank will work to “guarantee” fewer risks to foreign investors “If the private sector abroad wants to pay extra money to have a guarantee […] we can give it to them for a certain price. If they want it, we’ll provide it.”

The Minister further explained that Brazil has fulfilled two-third of the requirements to be accepted as part of the OECD and is looking forward to being part of the organisation in the next year. Transparency, regulation, combating corruption, and the establishment of acquisition protocols are some of the standards the country must meet to be part of the OECD.

Written by Harshini Nag

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