By reaching 25 years in 2020, the Brazilian Real can have a digital version. In line with discussions taking place around the world, the Central Bank (BC) of Brazil has a CBDC Study Group (digital currencies of central banks).
The schedule anticipates that the decision on a possible national digital currency shall be taken in six months. The information was given to Folha de São Paulo by Aristides Andrade, deputy head of the information technology department of BC and also the coordinator of the working group.
The president of BC, Roberto Campos Neto, has already indicated the creation of a digital currency as a natural spin-off of Pix and Open Banking. The first is an instant payment system that starts operating in November. On the other hand, Open Banking is a platform for consumers to share their financial data with other institutions for better credit conditions.
“We see, from now on, the union of an instant, open and interoperable payment method with an open data system. Where they meet, sometime up ahead, along with a currency that has to be improved… Up front, we see a much more digitized world with a digital currency”, Campos Neto said, according to CoinTelegraph.
But given the significant changes that a digital currency can cause in the financial system, it is necessary to analyze the reports about it before making the decision, the BC said in a statement.
Digital Brazilian Real runs up against obstacles
It is not yet known whether the digital real would use blockchain technology. However, according to CoinTelegraph, the indications are that this protocol should not be adopted. In 2019, former BC President Gustavo Franco said there was no point in using blockchain to issue a CBDC. Franco supported that blockchain eliminates the need for a “third validator”. Therefore, if an institution issues, distributes, and validates the currency, there is no reason to use this protocol.
The Pix and the possible creation of the digital real will also reduce spending. In 2019, the monetary authority spent more than R$ 90 billion to transport, store and ensure the security of the money.
However, the advance of digital currencies faces hurdles in the country. The BC itself points out that 60% of Brazilians still prefer cash, while 30% do not have access to the Internet. In addition, using CBDC requires a bank account —which is unnecessary in the case of paper money.