Digital Real pilot will be launched in 2022

Brazil should start a pilot version of what will be its Digital Real later this year. This is what the president of the Central Bank, Roberto Campos Neto, said in a live broadcast promoted by the Traders Club (TC) on Monday.

As the president of the monetary authority highlighted, the framework for central bank digital currency (CBDC) has already been thought out.

Digital Real is coming

According to Campos Neto, Digital Real will work, in practice, as a stablecoin. That is, as a stable digital currency paired with some other asset, in this case, the physical real.

In addition, the CBDC will be based on the Reservation Transfer System (STR), the “heart” of the Brazilian Payments System. It is in the STR where the final settlement of all financial obligations in Brazil takes place.

As highlighted by the executive, the STR has the Real as collateral. In this sense, a kind of digital STR will be created, which will be guaranteed by Digital Real. In addition, banks will be able to issue stablecoins on top of their deposits.

For Campos Neto, this is a way to digitize the currency, but without causing a break in the banks’ balance sheets:

“This project should have some kind of pilot in the second half of the year,” said Campos Neto.

Cross-border payments

Another point defended by Campos Neto is the need for CBDCs to work for cross-border payments. If this does not happen, cryptocurrencies will always be more efficient for this:

“If these digital currencies don’t have this cross-border payment factor efficiently, obviously cryptocurrencies will always be more efficient than any type of digital currency,” he pointed out.

The BC president also highlighted that the national CBDC will have an issuance limit. That is, it will have a fixed supply with a maximum amount to be issued.

Lift Challenge program, which coordinates the creation of Digital Real, selected the BTC exchange Mercado BTC to develop a proof of concept for the CBDC. According to the website, the exchange joins platforms such as AAVE and the banks Itaú and Santander in the project.

Cryptocurrencies: investment or payment method?

Regarding cryptocurrencies, Campos Neto reaffirmed that he sees these assets more as investment vehicles than as a means of payment. However, he pondered that this scenario could be changed if cryptocurrencies increase in adoption.

“What we think is that there is a curve where you start out as an investment vehicle and at some point it becomes a means of payment. This is because there is a process for financial agents to get used to it and accept it in payments”.