Brazil aims to launch a central bank digital currency (CBDC) by 2022, the president of the Central Bank of Brazil has revealed. The CBDC will be part of Brazil’s plan to digitize its payment system, including launching an instant payments system and a competitive Open Banking System.
Robert Campos Neto revealed the central bank’s CBDC ambitions during a recent event, local outlet Correio Brazilienese reported. The digital currency will be the future of the financial system, he stated.
However, for Brazil to launch the CBDC, it needs to build a foundation based on an open and instant payment system.
“To have a digital currency, you need an instant payment system that is efficient and interoperable; an open system, where you can create competition; and a currency that has credibility, is convertible and international. After that, I think you have all the ingredients to have a digital currency. We think we will have it in 2022,” Neto stated.
The Brazilian central bank has already kick-started its payments digitization process. One of its initiatives is PIX, an instant payments system that the bank will launch in November. PIX will allow all digital wallets that use QR codes to be interoperable, allowing seamless real-time payments. The system will eliminate all the intermediaries such as the card issuers, acquirers and issuers.
The central bank is also launching Open Banking as it seeks to create a competitive national financial system. Additionally, the bank has been working with legislators on amending regulations that will pave way for a CBDC launch.
Just a week ago, the central bank formed an intergovernmental study group to investigate the implications of a CBDC on the Brazilian economy. The 12-member group was charged with conducting a worldwide study on CBDCs, including the benefits to the economy, the potential risks, regulatory framework and more.
The Brazilian economy is still largely cash-centric, with 70% of the 209 million Brazilians choosing cash as their main payment method. However, with the advancements in financial technology and the spread of the coronavirus, digital payments are rapidly gaining a larger market share.