The race toward central bank digital currencies (CBDCs) is tightening, with Brazil reportedly looking to launch one by 2022 in a bid to help digitize payments. And although it’s not a winner-take-all competition, central banks first out of the gate might prove instructive to those who follow — particularly when it comes to new use cases or the goal of democratizing banking and digital payments. Roberto Campos Neto, president of Brazil’s central bank, said his country’s new digital currency will work in concert with its new instant-payments system.
“To have a digital currency, you need an instant payment system that is efficient and interoperable; an open system where you can create competition; and a currency that has credibility, is convertible and international,” he said, as per local media. “After that, I think you have all the ingredients to have a digital currency. We think we will have it in 2022.” Brazil’s instant-payments system, dubbed “Pix,” is slated to a widespread rollout in November. Digital wallets that use QR codes will be interoperable with the system.
The movement toward digital payments in Brazil — where various governmental agencies are already studying how CBDCs might impact the economy — should mark a technological leap forward for a country where cash still reigns supreme. Some 70 percent of Brazilians use cash as their main payment choice. Brazil’s latest CBDC news follows reports in this space last month that China is also gearing for a 2022 launch of a digital yuan — perhaps most notably for use at the 2022 Beijing Winter Olympics. CBDC trials already underway in China are reportedly looking at smaller retail payments.
Meanwhile, 80 percent of 66 central banks the Bank of International Settlements queried are embracing or at least studying the development of CBDCs. But China might have a head start, as 83 percent of payments done in that country take place via mobile devices. As for Brazil’s digital pivot, Nubank CEO and Founder David Vélez told PYMNTS in April as the pandemic raged that debit and credit offerings there were gaining increasing digital uptake. The digital currency envisioned by Brazil could see traction across peer-to-peer (P2P), wallet-to-wallet conduits, as P2P will be a feature of the country’s Pix instant-payment system.
Brazil has become the country with the third-highest tally of COVID-19 cases, there’s a big push underway toward contactless payments. Such payments grew five-fold between March 2019 to March 2020, as per Visa data reported by Latin America Business Stories. The BIS has said that CBDCs — particularly retail CBDCs — might be an important part of a financial inclusion policy. And soon, we might see a roadmap toward CBDCs used in real-life settings — laid out at least in part by Brazil.