Brazil Moves on to Experimental Pilot Testing Stage For its CBDC

Brazil is moving fast in its Central Bank Digital Currency (CBDC) development and has now gotten to the stage of pilot testing.

According to Reuters, the Central Bank of Brazil announced the commencement of the experimental pilot phase of its national digital currency; Digital Brazilian Real. The country aims at reproducing the success that was recorded on Pix, its instant payment platform.

The Brazil Central Bank is considering ways to use this advanced technology to boost financial services in its region.

Fabio Araujo, coordinator of the initiative at the bank mentioned that the public use of digital currency should be possible by Q4 2024. At that time, all testing phases of the digital Real including the purchase and sales of federal public bonds among individuals – and its subsequent evaluation would have been completed. 

“This environment reduces costs and brings the possibility of financial inclusion for people. You have services that are very expensive to carry out, such as repo operations, which today are only for banks, but which could be performed by anyone with a technology based on digital currencies,” Araujo said

CBDC Design on Distributed Ledger Technology

The technology under consideration here is distributed ledger technology (DLT). Markedly, Brazil is exploring this technology to develop the payment ability of the digital Real although that is not the sole intention of the CBDC. Once this is done, it would support the provision of retail financial services that are settled via deposits in the form of tokens amongst banks and other financial service providers in the region.

“This could reduce the cost of credit, the cost of improving the return on investments. There is a great potential for new service providers, fintechs, democratizing access to the market and offering new services,” he added. “Banks are very interested in this new tokenized world, in every conversation we have they have shown a lot of interest.”

Noteworthy, the Latin American country is not the only nation that has made outstanding progress in its CBDC development and implementation.

A few days ago, the Reserve Bank of Australia together with the Digital Finance Cooperative Research Center declared that the live pilot phase for its CBDC will debut this year. Similarly, Russia’s CBDC pilot testing is scheduled for April 1st.