The digital real may be closer than we think. This last Tuesday (24), the president of the Central Bank of Brazil (BC), Roberto Campos Neto, stated that the development plan of the Brazilian CBDC (the central bank’s digital currency) is “advancing quite fast”. In addition, he commented on the possibility of expanding the open banking project in the country with the creation of the so-called “open health”.
Campos Neto spoke during the Expert XP online event, organized by XP Investimentos. On the occasion, the BC president commented on the future digital version of the real: “The digital currency working group is at an advanced stage. We are starting to talk about the technology that will be used.”
According to him, some important issues involving the project have already been resolved, which allowed for this accelerated progress. Without much detail, Campos Neto said that the BC “found answers” to some of the initial questions regarding the Brazilian digital currency. “The project is advancing very quickly”, he concluded.
What would the digital real be?
There is still little information about the digital real future that is currently being studied by the Brazilian monetary authority. Current determinations indicate that this is an extension of the physical real, similar to China’s plans for its near-complete digital yuan.
In other words, while we would have banknotes and coins, we would also have a digital equivalent version to move around in a completely virtual way, with reduced costs and greater efficiency.
Its main use should be dedicated to retail transactions, essentially payments. Also called “govcoin”, Brazil’s cryptocurrency is totally different from a digital currency like bitcoin (BTC), for example. This is because CBDCs are always backed by a central bank, characterizing them as centralized rather than decentralized, as is the case with the most popular digital assets on the market.
The digital real could become a reality between 2022 and 2023, according to Central Bank estimates. We are talking about a considerably shorter deadline than other state-owned cryptocurrencies that are at the same stage of research and discussions, such as the possible digital euro, which is scheduled for 2026. In the case of the United States, the US Congress is still considering whether the CBDC will exist or not.
BC has already released guidelines for Brazilian CBDC
In late May, the BC announced guidelines for the creation of the digital real, determining that it would serve as an extension of the national physical currency. Ideally, the Brazilian CBDC would even work offline and would support payments with cards and completely digitally.
At the time, Fabio Araujo, from the BC Executive Secretariat, explained in a statement that the digital real would be “a new form of representation of the currency already issued by the national monetary authority, that is, it is part of the issuing country’s monetary policy.” These guidelines began to be drawn up in August 2020, designed mainly for its functioning, its legal guarantees and technological premises.
The Central Bank has not yet shared details about the Brazilian digital currency network, but, following the trend of other existing CBDCs and in planning in the rest of the world, the national monetary authority should create it within the blockchain technology to ensure its security, transparency and practical use at low costs. Finally, its value should be stable and probably equivalent to the physical real.
CBDC do Brasil is also being designed for cross-border payments in order to facilitate international digital movements. Araujo said in May that the digital real has “the potential to apply new technologies, such as smart contracts, IoT (internet of things) and programmable money, in new business models that increase the efficiency of our payment system”.
Expansion of open banking for the health area
In addition to the Brazilian digital currency, the BC president commented this Tuesday on the possibility of expanding the institution’s open banking project with the so-called “open health”. This is a system, still under study, with open data and which would integrate information on the health of the population.
The plan has already been discussed with the Minister of Health, Marcelo Queiroga. For him, the idea of gathering medical data from Brazilians, with possible integration with health plans, would reduce the cost of healthcare in Brazil.
With information: Poder360