Central Bank of Brazil to Launch CBDC by 2024

UTC by Babafemi Adebajo · 2 min read
Central Bank of Brazil to Launch CBDC by 2024
Photo: Depositphotos

The announcement of a CBDC pilot comes after the Central Bank of Brazil partnered with nine banks that will assist it with CBDC development.

The Central Bank of Brazil has unveiled its plans for a central bank digital currency (CBDC) by 2024. Bank President Roberto Campos Neto revealed this while speaking at a conference hosted by Poder360.

Before the widespread use of the CBDC begins, the Central Bank will pilot-test the currency with some financial institutions. According to President Campos Neto, a digital currency provides a way to improve financial inclusion when added to its Open Finance and PIX programs.

In 2020, the Brazilian Central Bank launched PIX and saw widespread adoption. PIX has about 122 million active users, accounting for 57% of the Brazilian population. Following its success, the Bank of International Settlements lauded the effort, and it quickly became a benchmark for other countries.

In 2021, Brazil also launched the Open Finance program to allow sharing of customer data between financial institutions. So far, the program has attracted over 800 financial institutions and 9.6 million customers.

President Campos Neto believes that the tokenization of the Brazilian currency could be the next initiative to spur financial inclusion in the country. He said, “I think that this digitized, paid-in, integrated system, with inclusion, will help a lot in the development and inclusion of people in the financial world,” Campos Neto said.

The Road to a CBDC Launch

The announcement of a CBDC pilot comes after the Central Bank of Brazil partnered with nine banks that will assist it with CBDC development. It also comes after the Brazilian Chamber of Deputies approved the crypto bill.

Recall that after almost three years of work on it, Brazil introduced a crypto bill in February. The Senate approved the bill in April and sent it to the lower House of Parliament, where it has been since June.

The approved bill defines a virtual asset (VA), a broker or exchange, and the arms of the federal government that should have jurisdiction over crypto-related cases. It also set a punishment of two to six years for fraud committed using digital currencies.

If it launches the CBDC, Brazil will join countries like the Bahamas, China, Jamaica, and Nigeria, which have launched CBDCs. In addition to improving inclusion, Campos believes going on-chain will lower costs, reduce entry barriers, and improve risk control.

“This is what we see in this digital economy in Brazil,” he concluded.

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Babafemi Adebajo

An experienced writer with practical experience in the fintech industry. When not writing, he spends his time reading, researching or teaching.

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