The president of Brazil’s Central Bank, Roberto Campos Neto, announces the launching of the Brazilian Central Bank Digital Currency (CBDC) later this year.
The CBDC will be included in the country’s national currency in the future, making it the second nation to do so.
This move comes as Crypto adoption has been on the rise in Brazil, with many people turning to digital assets as a way to hedge against inflation.
The Brazilian Real Income has seen a steady decline in value over the past few years, and this has led many people to seek alternative investments.
Cryptoassets have become an attractive option for many Brazilians, and the introduction of a CBDC could further increase adoption.
While the launch of the CBDC is still subject to regulatory approval, if all goes according to plan.
We could see the Brazilian Central Bank begin issuing the digital currency sometime in 2022.
This would make Brazil one of the first countries in the world to launch a national digital currency.
And it would definitely set a precedent for other nations.
The Brazilian CBDC would be linked to the country’s fiat payment infrastructure.
Functioning at the same value as the national currency but operating similarly to Bitcoin with a limited supply.
Neto states that the CBDC, or Digital Real, would be created with a set amount to digitize the national currency without disrupting the economy.
“[Real Digital’s Reserve Transfer System] is a way of digitizing currency without creating a bank balance-sheet rupture.
In the second half of the year, this project should have a pilot.”
The announcement of a Brazilian CBDC pilot launch follows a month underground work.
In which the country’s central bank teamed up with nine banks across the nation to aid and help develop digital currencies.
The country is in the process of putting together an infrastructure.
That will allow it to test out how it will be introduced and what use-cases may develop.
Last year, Neto weighes in on the need to introduce digital finance in the country:
“The Real Digital project is a reaction to the quick development of digital transformation and society’s demand for native currencies in a new environment. ”
“We’ve come a long way since the formation of the working group on digital currencies in 2020.
And with each stride made, we improve the conditions to allow for important efficiency improvements.”
“In a world where we increasingly live our lives through digital channels.
It is essential that the payment system evolves to meet the new reality.
The pandemic has made this even more evident. Cash is expensive, inefficient and sometimes impractical.
Our goal is to make payments in Brazil simpler, faster, cheaper and safer for everyone.”
The Central Bank president’s confirmation places Brazil among those interested in adopting crypto as a national currency.
While Brazil is still a long way from adopting Bitcoin as legal tender.
It has been considering how to include cryptocurrency and digital assets into its legal system this year.
After three years of development, Brazil released a cryptocurrency bill in February to establish rules for the market.
Cryptocurrency, A Tool For Payments or Investment?
The debate rages on whether cryptocurrency should be recognized as a replacement investment asset class like digital gold.
Or whether they should be treated as a payment method for retail and commercial transactions.
In an interview with Business Insider:
Neto says that cryptocurrencies are more likely to be utilized as an investment instead of a payment system in the economy.
However, he points out as more new investors and firms enter the market, the digital industry’s scope may change.