Brazil's Central Bank Announces Plans to Introduce Digital Currency in 2024
The Central Bank of Brazil is working towards introducing a central bank digital currency (CBDC) by the year 2024, according to the bank's President, Roberto Campos Neto. The announcement was made during a conference hosted by Brazilian news site Poder360 on Tuesday.
The introduction of a CBDC would mark a significant development in the country's financial system and could potentially revolutionize the way individuals and businesses transact. Campos Neto also highlighted the potential advantages of integrating the CBDC with both traditional finance and decentralized finance (DeFi) institutions.
In order to successfully implement this new digital currency, the bank will first conduct a pilot program in collaboration with financial institutions. This pilot program will provide an opportunity for the bank to test and evaluate the CBDC before it is rolled out for wider use. Once the pilot program has been completed and any necessary adjustments have been made, the CBDC will be made available for broader use among individuals and businesses in Brazil.
“I think that this digitized, paid-in, integrated system, with inclusion, will help a lot in the development and inclusion of people in the financial world,” Campos Neto added.
A major focus of the bank is on combining Open Finance and digital real, allowing Brazilians to manage all their financial instruments, including the digital real, tokenized banking deposits, and cryptocurrencies, through a single app. The digital real is programmable and can be integrated with new payment systems, such as Pix and Web3 ecosystems. This project aims to bring together traditional and legacy finance instruments in a single hub.
A growing number of countries are exploring the use of CBDC as an alternative to traditional fiat money. Some have become more committed to using a CBDC as a secure alternative to cryptocurrency following the collapse of the crypto exchange FTX, which caused turmoil in the industry.
With the issuance of its digital currency in 2024, Brazil will join Jamaica, Bahamas, Eastern Caribbean and Nigeria as countries that have already issued their own CBDCs.
CBW - External Analyst