Brazil Central Bank may introduce CBDC by 2022

Brazil Central Bank may introduce CBDC by 2022

Is Brazil coming next after e-yuan of China?

Brazil’s chief central banker, Roberto Campos Neto said “CBDCs are the consequence of fast-digitizing financial systems such as Brazil's. Banco Central is rolling out its PIX instant payments system in November and launching an Open Banking initiative later this year”

BCB established study group on issuance of CBDC

This comment makes sense, as in mid-August 2020, Banco Central do Brasil (BCB) created a study group, which objective is to study central bank digital currency (CBDC) and evaluate the potential benefits and impacts of issuing the Brazilian Real in a digital format.

In their press release dated September 2nd mentioned that ”  BCB will start by studying the digital currency issuance model to understand the phenomena and its potential impacts, particularly on as financial inclusion, economic growth, technological innovation and efficiency of financial transactions.”

And added “Among the study group's objectives is the proposition of a digital currency issuance model covering risk mapping — including cyber security, data protection and regulatory compliance issues , as well as an analysis of CBDC's impacts on financial inclusion and stability and on the conduct of monetary and economic policies”

Cost of money cycle

The potential benefits of a digital currency issued by the central bank to society comprise the reduction of the cost of issuing and managing bank notes and coins in circulation. The cost of money cycle in Brazil — issuance, custody, distribution, handling by trade, collection, disposal and other indirect costs — is approximately BRL 90 billion per year, in line with other countries experiences, where it usually varies between 1% and 2% of GDP, depend on to the size and particularities of each economy.

Financial citizenship

In addition to cost reduction of the money cycle, a digital currency issued by BCB can support its strategic objective of 'fostering the financial citizenship and strengthen the relationship with society and public powers'. An electronic currency can increase the safety of handling and custody of cash, in addition to creating monetary policy instruments.

Source: Brazil Central Bank
Home

Copyrights © 2020 The Unlock Company DMCC

Stay updated with the latest Blockchain news. Subscribe and never miss a story!