Digital currency will have tests with real customers until 2023, predicts the Central Bank

With the launch of a laboratory of technologies aimed at virtual currency, the Central Bank foresees that tests with the so-called Real Digital will include consumers until 2023, initially with limited segments of financial institutions’ clients.

Projects must be submitted by fintechs and banks by July of next year. The idea is for the BC to operationalize pilots with specific audiences, both from consumers and financial service providers.

According to the monetary authority, tests without interaction with the public may start at the end of 2022 and should extend throughout 2023, with the gradual inclusion of some groups of clients.

The implementation of these technologies, however, is likely to take time because it needs to be done more slowly to reduce the impacts of adaptation.

Lift (Laboratory of Financial and Technological Innovations) was created in 2018 to receive projects and prototypes of new financial solutions from companies. Last week, the version to debate the digital currency was released.

The initiative won a special edition for technologies aimed at implementing the official digital currency, called CBDC (Central Bank Digital Currency).

In this version, proposals will be prioritized to solve issues that are obstacles to the implementation of the virtual version of the real, such as offline payment, exchange solutions and facilitating the settlement of transactions with digital assets.

The laboratory is carried out in partnership with Fenasbac (National Federation of Central Bank Servants Associations). Applications start on January 10, 2022 and run until February 11th.

In March of next year, the selected projects will be announced and the execution phase will begin, which runs until July. Afterwards, BC must select the best proposals and integrate with their systems to run pilots and start tests.

According to BC, the focus of this edition is on participants in the financial system, such as banks, cooperatives and payment institutions and fintechs, but any company can participate.

“The actions require a more robust infrastructure, which members of the financial system already have, but any project is welcome”, says Rodrigoh Henriques, a specialist at Fenasbac.

Virtual money would be just a new form of representation of the currency already issued by the monetary authority, that is, it would be part of the country’s monetary base.

“The person may have specified electronic money in their account, which is what we already have in the bank today, and digital currency. The difference is that some transactions can only be made possible through virtual money, such as programmed use”, says Henriques.

According to him, the programmed use would allow that resource to be used in only a specific segment, such as food.

Furthermore, the new modality could facilitate complex transactions. “Digital currencies are an ideal means of payment for smart contracts”, says the expert.

The creation of the laboratory is another step of BC towards the implementation of the digital real. In August of last year, the monetary authority created a working group to discuss the impacts, benefits and costs of the new monetary model.

In May of this year, the guidelines for the new money were released, with a forecast of use in retail payments, absence of remuneration, guarantee of legal security in its operations and adherence to all privacy and security principles and rules.

The idea is widely defended by the president of the autarchy, Roberto Campos Neto.

On several occasions he stated that the BC’s objective with the implementation of Pix, an instant payments system, and open banking is that both culminate in the creation of a digital currency.

The difference between official virtual money and the cryptocurrencies that exist on the market today (such as bitcoin or ethereum) is that the one issued by the BC would be similar to paper money, guaranteed and managed by the State, while the others have no guarantees and are not accepted widely in trade.