The Central Bank is betting on a series of investments to accelerate digitalization in Brazil. In this context, the creation and launch of Real Digital are considered the last element of a tripod applied to the economy. A study by consultancy Oliver Wyman, released this week, presented the potential for use, but also the challenges of digital currency.
Competing with stablecoins, Real Digital focuses on transactions applicable mainly to retail, wholesale and financial institutions. In retail, the tokenization of bank deposits and funds in bank accounts would be potential uses for cryptocurrency. The analysis report pointed out at least 13 potential use cases of the project:
- Tax collection
- Right to possession of non-financial assets
- FX (cross-border payments)
- Management of multiple counterparties
- Collateral management in the capital market
- Financial inclusion
- Micropagamentos
- Trading financial assets
- Trading low liquidity assets;
- Offline Payments
- Loan securitization
- digital insurance
- Tokenization of future accounts
Like this, the report defended: “As CBDCs (Central Bank Digital Currency) have the potential to address latent pain in the global market (like payments and FX). However, one must carefully consider the possible consequences of implementing”.
Financial inclusion
Central Bank Digital Currencies aim to make payments faster, cheap and sustainable. Nonetheless, the Wyman study claims that there is only 4 CBDCs around the world, including the Brazilian. The Real Digital pilot project is still in the testing phase.
The Central Bank continues to study how to develop the structure in which the currency will operate. In addition to improving the country's payment system and increasing financial inclusion, the currency eliminates the need for banking to access financial services, simplifying processes.
Digital security and other challenges
The adaptation of users with a cryptocurrency will naturally have many consequences for the Brazilian economy and financial market. In addition to membership itself, the increase in fraud is among the main challenges that Real Digital may face. That's why, the Central Bank has been working with this focus on security.
According to the study, the currency offers positive and negative points: “potential reduction in the volume of resources available for credit operations, reduction in the volume of demand deposits, used in resource policies intended, greater volatility in bank runs due to easier movement of resources and the challenge of maintaining financial privacy”.
Another challenge of the project still concerns the practical parts. The Central Bank is still evaluating how to define Real Digital’s key success metrics, in addition to how the blockchain infrastructure should behave with network expansion and the many new use cases and transactions.
Predicting the changes brought by digitalization, the consultancy responsible for the study expressed. “It is essential that institutions delve deeper into the topic and prepare, identifying monetization/optimization possibilities and potential threats to the current business model”.
