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Roberto Campos Neto, the President of the Central Bank of Brazil, has confirmed the status of the country’s development of its central bank digital currency (CBDC). Digital Real development is expected to begin soon, with commercial banks required to digitize part of their balances in the coming years.

Preparing For The Pilot Test

Brazil is leading in developing its CBDC and designing its digital financial infrastructure among the South American countries. The head of the country’s central bank, Roberto Campos Neto, recently explained in detail the activities of the financial regulator to build a robust foundation for the operation of the digital Real.

Speaking at a conference hosted by one of Brazil’s largest banks, BTG Pactual, the central banker has revealed that the digital Real pilot tests are starting as soon as possible. Campos Neto added that most private financial institutions and the general public had widely backed the project.

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According to his estimate, the project’s developmental round is expected to be completed by December 2023, the same period his mandate as the President of the country’s central bank ends. Furthermore, the bank chief stated that implementing the digital Real will help commercial banks become more digitalized and make virtual assets part of their balance sheets.

Based on the country’s CBDC model, each financial institution would be allowed to issue digital reals that deposit regulated by the central bank backs.

A Vision For Digital Finance

During the conference, Campos Neto revealed his intentions to reposition Brazil’s digital finance sector before the expiration of his tenure. To him, the digital Real is just one vital piece of restructuring the country’s financial system.

Other initiatives of Campos Neto include the PIX, a fiat payment system, and the Open Finance projects to allow the seamless interconnection of banks in the country. According to Neto, the CBDC initiative would significantly change how personal finance is used in the country and transform Brazil’s system into an advanced and efficient monetary platform.

In early February, Fabio Araujo, the Central Bank of Brazil CBDC coordinator, explained that the pilot test for the digital reals would be conducted before the end of the year’s first quarter. The pilot test evaluates the degree of security the CBDC would offer users and the level of user privacy with the existing regulatory measures.

After the emergence of virtual currency, Brazil has had a history of embracing the asset unofficially until recently. In the past few days, the country’s oldest bank, Banco do Brasil, announced that Brazilian taxpayers can now settle their taxes in crypto assets.

The latest move comes after the banking giant teamed up with Bitfy, Brazil’s leading crypto firm, to offer the services to residents with an active wallet with the platform. Meanwhile, the city of Rio de Janiero has already started accepting payments for taxes in cryptocurrency since last October.

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George Ward

By George Ward

George Ward is a crypto journalist and market analyst at Herald Sheets, known for his engaging articles on the latest digital currency trends. With a background in finance and journalism, he presents complex topics accessibly. George holds a degree in Business and Finance from the University of Cambridge.