The Central Bank of Brazil has begun testing its Central Bank Digital Currency (CBDC) project, which promises to facilitate greater participation of individuals in the financial sector. In addition, the Thai government is willing to provide tax breaks for companies that issue digital tokens for investment purposes.
Widespread use of the digital real is expected to happen after the pilot is completed in 2024, according to Fabio Araujo, the CBDC project coordinator at the Central Bank of Brazil, Reuters reported on Monday (March 6, 2023). Part of the testing phase will include individuals buying and selling federal bonds and subsequent evaluations.
The report also claims that Brazil’s CBDC will be a blockchain-based payment method that supports retail transactions. This payment will be backed by the customer's deposit in his bank account. In this way, banks will not be disintermediated as they will exist in the CBDC matrix. Therefore, they do not lose their source of credit.
A statement from Araujo said: “This environment reduces costs and opens up the possibility of financial inclusion for people. You have services that are very expensive to execute, such as repo operations, that are currently only available to banks, but anyone can use a digital currency-based technology to execute."
The central bank executive added: “This can reduce the cost of credit, the cost of improving ROI. There is huge potential for new service providers, fintech, democratizing market access and delivering new services.”
According to Araujo, the proposed CBDC scheme does not intend to interface with digital payment rails, as Brazil’s existing payment system, Pix, already achieves this purpose.
Apart from Brazil, other countries are also conducting CBDC pilots. As previously reported by CryptoPotato, Japan’s top bank hopes to begin trials of its CBDC project in April 2023. India's retail digital rupee pilot began in December 2022 with 50,000 users and 5,000 merchants on board. In the United States, however, Representative Tom Emer recently introduced a bill that would stop the issuance of digital dollars.
