In a remarkable stride towards digitization, Brazil’s central bank is steering the country towards the integration of a digital version of its national currency, the real.
The Banco Central do Brasil has unveiled plans to inaugurate a central bank digital currency (CBDC) pilot project, garnering significant interest from a diverse range of participants, both domestic and international.
Among these participants, tech powerhouse Microsoft has made a prominent entrance into the scene, partnered with Brazil-based Banco Inter and the digital technology firm 7COMm.
A promising assemblage for the CBDC pilot project
The finalized list of participants for this pilot project was made public on May 24th, compiled from a whopping 36 applications that represented more than 100 institutions. Out of these applications, only 14 entities made the cut, with some representing conglomerates of companies.
Microsoft, a name synonymous with technological innovation, has joined forces with the native financial institution, Banco Inter, and digital tech company 7COMm, representing one among the 14 entities.
This venture of Microsoft into the realm of digital currencies underscores the tech giant’s increasing engagement with emerging financial technologies.
Aside from Microsoft’s consortium, the CBDC pilot will also see participation from global financial services corporation Visa, multinational banking group Santander, and several significant Brazilian banking establishments, including Itaú Unibanco, BTG Pactual, and Banco Bradesco.
Exploring the possibilities with digital real
In the initial stages of this pilot, Banco Central do Brasil aims to evaluate the privacy and programmability features of the CBDC platform. The testing will center around a single use case: a delivery versus payment (DvP) protocol for federal public securities.
The digital version of the real, officially announced in 2022, will be pegged to its fiat counterpart and would be minted over time with a predetermined supply.
This ambitious initiative of Banco Central do Brasil marks a significant step for the Latin American country, home to over 214 million people, attracting the attention of global crypto firms.
Earlier this year, Binance and Mastercard launched a prepaid crypto card in the country, and Coinbase collaborated with local payment providers to offer crypto purchases, in addition to facilitating deposits and withdrawals in the local currency.
A wider Scope for the digital economy
The digital real pilot, open to a wide array of financial institutions, cooperatives, public banks, crypto service developers, payment institutes, and infrastructure operators, marks a turning point in Brazil’s financial landscape. It is expected to foster inclusivity in the country’s burgeoning digital economy.
As per the timeline announced by the central bank, the integration of the selected participants into the digital real pilot platform will commence by mid-June 2023.
The pilot, bringing together entities from diverse financial segments, signals a significant leap towards the development and implementation of a CBDC in Brazil.
The partnership of Microsoft, Banco Inter, and 7COMm in this initiative underscores the potential for symbiotic relationships between tech firms and financial institutions in shaping the future of finance.
As the global trend towards digitization intensifies, the anticipated launch of the digital real presents an exciting prospect for the Brazilian economy, propelling it to the forefront of financial innovation.
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