• The Central Bank of Brazil (Banco Central do Brasil) is reportedly planning to launch a CBDC called DREX in 2024.
• It will use distributed ledger technology (DLT) to settle interbank transactions, while retail access will be based on existing bank deposits.
• The main purpose of the CBDC is to increase access to financial services and investments, lending, and insurance services in Brazil.
Brazil Planning CBDC Launch
The Central Bank of Brazil (Banco Central do Brasil) is reportedly planning to launch a central bank digital currency (CBDC), called DREX, in 2024. It will aim at advancing the domestic financial network by improving access to monetary services and increasing investments, lending, and insurance services.
Technology Used for Settlement
DREX will employ distributed ledger technology (DLT) to settle wholesale interbank transactions, while retail access will be based on the digital equivalent of existing bank deposits. Fabio Araujo – coordinator of the digital real – said that some Brazilians have already started conducting digital settlements via the payment platform Pix.
Support from Finance Companies
Well-known finance companies have supported Brazil’s CBDC project with Mastercard being one of them. Mastercard has proposed using its expertise in facilitating payments over secure networks as well as providing an infrastructure that would ensure reliable execution at scale for the new Brazilian CBDC system.
Impact Expected From Introduction
The introduction of DREX is expected to reduce costs and democratize access to financial services in Brazil by enabling simple and reliable access to registered values through DLT technology. Furthermore, it could boost investments, lending, and insurance services within the country.
Brazil’s foray into the world of central bank digital currencies with DREX has received widespread support from both finance companies as well as individuals who are already leveraging Pix for their online payments needs. If all goes according to plan then this should help reduce costs associated with accessing financial services while also boosting investments within the country when it goes live in 2024.