• Brazil’s Central Bank is launching a pilot project for the country’s digital currency called the “Digital Real” in 2024.
• The “Digital Real” would leverage distributed ledger technology (DLT) to reduce costs and enable access to financial services for people.
• It could also create space for financial technology companies to innovate and offer new services, transforming banking for good.

Brazil’s ‚Digital Real‘: Unlocking Financial Innovation

Brazil’s central bank is looking to launch a revolutionary pilot project: its own digital currency, the „digital real“ in 2024. This move could be a major boost for fintech firms, as well as traditional finance (tradFi). The CBDC could cut costs and enable completely new financial services that can transform banking for good.

Leveraging Distributed Ledger Technology

The „digital real“ will leverage distributed ledger technology (DLT) to democratize access to financial services. Fabio Araujo, the initiative’s coordinator, said that this system would reduce costs and enable significant financial innovation. Services that are currently expensive or only available to banks through repo operations could become accessible with DLT-based technology.

Benefits of Digital Real

The potential benefits of the „digital real“ go beyond digital payments like Pix, which is already popular in Brazil. Instead, it could potentially reduce the cost of credit and return on investments through innovative fintech solutions. This could democratize access to the market and offer new services not previously available before now.

CBDCs Around The World

Brazil is far from alone in its pursuit of CBDCs; according to the Atlantic Council almost every major developed country is at some stage of research and development of its own CBDCs. These digital currencies are based on fiat money but leverage DLT similar to crypto assets such as Bitcoin or Ethereum.

Conclusion

CBDCs have great potential to revolutionize finance by reducing costs and enabling access to financial services previously unavailable due to their high cost or lack of infrastructure necessary for traditional finance options like repo operations. Once launched, Brazil’s „digital real“ has great potential disrupt tradFi by creating space for fintech solutions that can expand access and create new services – transforming banking for good!