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Brazil wants to see the degree of security and privacy that its CBDC can bring to the system.
Preparation for the launch of Brazil’s central bank-issued digital currency (CBDC), the digital real, is in full swing. However, as the testing phase approaches, the Central Bank of Brazil has identified two key areas it would focus on. They are the areas of security and privacy.
Digital Real to Prioritize Transaction Privacy, Says CBDC Coordinator
Although specific details of Brazil’s first digital real tests are yet unknown, the tests will take place sometime later this year. The test will involve the digital real being used to transact with a yet-to-be-identified tokenized asset. However, Brazil is keen on stretching the CBDC’s limits to determine the anonymity and security levels its transactions could deliver.
According to Fabio Araujo, the coordinator of the digital real project at the Central Bank of Brazil, these two areas are a priority of the pilot program. Speaking in an interview with Broadcast, he said partly:
“We are going to have several participants exchange information to see the degree of security and privacy that we can bring to the system. The pilot is focused on that.”
Araujo spoke further about the test. He said they want to ensure that if ever there’s any transaction information leakage from the system, it doesn’t flout current regulatory rules.
Possible Launch Date
Presently, the digital real is in the laboratory phase, which is part of what is called the ‘LIFT challenge.’ The LIFT challenge is an open project that comprises various organizations. There is an expectation for all member organizations in the challenge. That is to deliver their various project reports on or before April 25. It is after that that the pilot tests for the digital real may begin.
Furthermore, the pilot will be conducted in a limited scope and will only feature a soon-to-be-known tokenized asset for transactions.
However, it should be noted that the test will be expanded to third parties, including banks and other institutions. So, it might be safe to say that the expanded test environment may well extend into 2024.
Recall that Roberto Campos Neto, president of the Central Bank of Brazil, also hinted at a 2024 release date last December. From all indications, Brazil seems to be well on course with its CBDC plans.