A representative of the Central Bank of Brazil, Fabio Araujo, discussed the possible creation of a Digital Real at a public hearing of the Brazilian Senate. Araujo spoke before the Committee on Science, Technology, Innovation, Communication and Information Technology and said that the Digital Real was still at the debate stage because they were trying to determine the kind of demand this type of instrument would have. Speaking at the public hearing, Araujo said that the bank was trying to figure out if the society may have a need for a Central Bank Digital Currency (CBDC) or not.
He stated that their goal was to get a clear idea of the expectations the society would have of Real Digital. He said that once they understand them, they would immediately move onto proof of concept for the testing phase and could possibly come up with an innovation laboratory. According to Araujo, all of this should take place during the year 2022. Araujo also disclosed that the Central Bank of Brazil was still conducting meetings with different parties that could be helpful in designing the project of the Digital Real. The meeting was proposed by Senator Cunha and he said that it was necessary to have a discussion regarding the use of digital currencies because there wasn’t much information available on this subject.
He said that it was important to have a debate on this topic because digitization has become a reality in the daily lives of the people in different fields. However, there is not enough information about how this will happen when it comes to the circulation of money in Brazil. Nonetheless, it is important to note that all this talk about a central bank digital currency (CBDC) like the Digital Real doesn’t mean that the country would be willing to give an approval to cryptocurrencies, such as bitcoin and ethereum. As a matter of fact, the Central Bank of Brazil appears to have a negative stance regarding them.
It was clarified by Araujo that people shouldn’t confuse central bank digital currencies with cryptoactives. He added that the Central Bank of Brazil regards crypto assets as speculative assets that are highly risky when it comes to investment portfolios. Their opinions about CBDC are not applicable to these digital currencies at all. While they are still in the research phase of developing a Digital Real, the Central Bank of Brazil did go ahead with issuing some general guidelines that should be followed by such a currency, if it were introduced.
This shows that they are truly interested in the subject. This interest puts Brazil at the center of the investigation into central bank digital currencies (CBDCs) in Latam. This is a region where most of the central banks in existence don’t seem to be too interested in this subject as of now, even though it is becoming increasingly relevant in different parts of the world, especially developing economies. China has made a great deal of progress and would be testing its CBDC in the Winter Olympics in Beijing.