Fabio Araujo, director of the Central Bank of Brazil and leader of the Digital Brazilian Real project (Brazil’s CBDC version), said that the new payment system will have its own blockchain, whose design is inspired by the Ethereum network.
In addition, the tokenized version of the country’s tokenized currency will have two versions, as it will be issued on a retail and also wholesale basis
In an interview published in the local media, Araujo talked about the details contemplated by the team working on the central bank digital currency (CBDC) that Brazil plans to launch in 2024.
In this regard, he pointed out that the system allows to program payments through smart contracts, as Ethereum does, but not in a public way, but in a blockchain permissioned for all banks that will operate in an integrated manner.
In that sense, the payment system under development will allow the issuance of tokens and stablecoins in a centralized manner and additionally integrate with decentralized finance (DeFi).
As previously reported, this will allow users of the digital real to share their financial data (not necessarily from a bank, but also from other sources) with third-party companies.
Araujo pointed out that, in order to comply with this proposal, the current Central Bank payment system, created 20 years ago, will evolve to the digital economy. It means that in this new platform “it will work in an integrated way to what already exists”, so everything will be tokenized, such as shares, debt securities, consortium bonds and other financial assets, as reported by the referred media.
Real Digital for large transactions and for the Brazilian population
As stated earlier in this article, the digital real will be issued in two versions, one retail or as a general purpose payment instrument, consumer oriented and available to the entire population of Brazil.
The other version is the wholesale version, which will be available through a restricted-access digital settlement token, used mainly for the settlement of interbank transfers and related wholesale transactions in central bank reserves.
In its retail version, a user can use and program his digital wallet to transfer digital reals whenever certain events occur.
“For example, every time a vehicle passes through a toll, the token with the amount corresponding to the fare will be transferred from the car’s digital wallet to the service provider,” Araujo said.
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On the wholesale side, central banks provide the ultimate means of payment for financial institutions, which will help reduce risks in the financial system.
Araujo mentioned other characteristics of the digital real, such as the fact that the funds are under the custody of the financial institution and therefore the bank must recognize the identity of customers, including their biometrics, passwords and artificial intelligence.
With their identity verified, the population and companies will be able to access the reimbursement rules of the Credit Guarantee Fund, which in Brazil is seated at no more than USD 48,000 or 250,000 Brazilian reais.