Bank of Brazil Includes 14 Participants in Its CBDC Pilot

UTC by staff writer · 3 min read
Bank of Brazil Includes 14 Participants in Its CBDC Pilot
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The Brazil Central Bank Digital Currency will initially focus on wholesale interbank transaction payment solutions.

Banco Central do Brasil (the Central Bank of Brazil) plans to include more participants in its digital currency scheme. The list, released by the bank on May 24, includes the names of all the participants with whom the CBDC digital real is set to launch. The final list of 14 participants was compiled from 36 bids submitted by individuals and collaborating entities, totaling more than 100 institutions.

Brazil Digital Real Pilot Will Begin with 14 Participants, Including Visa and Microsoft

Intending to launch it fully in 2024, the Brazilian central bank announced the beginning of its Central Bank Digital Currency (CBDC) last year. The solution’s initial purpose is to ease wholesale interbank transactions, and eventually, it will be made accessible to customers through tokenized bank deposits. The CBDC solution aims to make transactions instantly settleable and lower overall transaction costs.

This phase of the digital real pilot aims to test privacy and programmability functions to ensure that the process of exchanging information between various participants on the platform will be easy. It will also test the programmability and interoperability of the services the participants offer.

The participants on the recently released list include both single and collaborating entities. They include names like Bradesco, Banco Inter, Microsoft, and 7comm; XP and Visa; Bano ABC, Hamsa, and LoopiPay; Itau Unibanco; Microsoft in collaboration with other institutions; and the Bank of Brazil.

The list includes a wide range of organizations, including cooperatives, public banks, payment solution providers, financial market infrastructure operators, providers of crypto asset services, and payment arrangement providers. With all these entities in place, the Brazilian central bank intends to add the chosen participants to the digital pilot platform by June 2023.

Brazil CBDC Pilot Will Initially Focus on Wholesale Payment Solutions

The Brazil CBDC, digital real, is an extension of the Brazilian physical currency. It can be exchanged for the traditional currency and will have the same price and value as the traditional currency. This initiative will promote the greater inclusion of Brazilian citizens in the financial system. The solution combines the features of fiat and digital currencies, allowing the digital currency to benefit from the price stability attributes of fiat currencies while leveraging blockchain technologies for faster and more secure transactions.

One of the reasons the solution primarily focuses on wholesale transactions instead of retail is that Brazil already has an established digital payment system, Pix. Pix is already one of Brazil’s largest e-commerce payment solutions; it was launched in 2022 and is currently used by over 60% of Brazilians.

Rather than trying to compete with this established solution, Banco Central do Brasil will follow Pix’s model in other areas of financial services, particularly at the wholesale level.

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