João Manoel Pinho de Mello, director of the Central Bank of Brazil (BCB), announced at a panel discussion on the digital real’s potential that a major movement from paper money to digital means of payment will take place in the next few years. Mello stated that,

We understand that the use of CBDC will occur in situations where it can bring greater efficiency and transparency to transactions, whether from the retail perspective or its use by agents that make up the financial and payments industry.

The adoption of digital payments will need the usage of digital currencies issued by central banks. Official digital currencies can increase financial inclusion and lower the cost and time of cross-border payments if they are well-designed. However, the process demands considerable caution in terms of design and technology to avoid data protection laws, bank runs, and cyberattacks.

Mello also stated that the usage of digital currencies across countries should be given special care to prevent undesired replacements of one country’s sovereign currency for another.

A newly established rapid payment system known as PIX and an open banking model are two key aspects of Brazil’s financial system. The bank stated that the success of such measures will drive it closer to launching a CBDC, Valor Economico reported.

Related: U.S. Federal Reserve Chairman met Coinbase CEO to talk about CBDC

Brazil’s central bank issued clear guidelines for digitizing its currency, the real, in May. The revelation of the central bank’s plans to develop a digital currency is part of the central bank’s strategy to modernize the Brazilian payments sector.

Recently, Brazil got its first crypto unicorn by Brazilian cryptocurrency exchange Mercado Bitcoin who raised US$ 200 million from Softbank Latin America Fund. The holding that controls Mercado Bitcoin has become Latin America’s seventh most valuable unicorn.

New to Crypto? Learn Cryptocurrency Trading at Todayq Education


Comments are closed.

Copy link
Powered by Social Snap