A recent report states that Brazil’s central bank is developing a unique kind of CDBC. According to the central bank’s president, the CBDC will be used for wholesale purpose. Also, private banks will be able to use the digital Real as collateral to issue stablecoins.
Digital Real Will Be wholesale Oriented
Brazil plans to issue a wholesale CBDC with a different design compared to numerous CBDCs. According to the report, the CBDC will be used for a wholesale purpose and not retail.
Brazil’s central bank president, Roberto Campos Neto, made the announcement at a cryptocurrency summit. According to the president, banks can now issue stablecoins on all deposits.
Also, banks will make gains from the process. As a result, they must invest in the development of the technology. In addition, the protocol for stablecoin issuance will be the same as monetizing other crypto assets.
Furthermore, Neto explained the focus of the electronic Real would be unique. Its main goal will be to monetize assets without affecting private banks’ credit functions. Also, the digital Real will be used as collateral.
Issue Of Tokenization and Disorder In CBDC Development
The president believes tokenization is one way that CBDC can improve its operation. Speaking on the matter, he made reference to mortgages.
“With a tokenization system, getting a paying a reverse mortgage become easier. In addition, it will help help reduce fee and time spent on waiting. Hence, this will simply the paperwork for CBDCs,” he added.
With regards to this, Brazil has launched a Brazilian Blockchain Network. The aim of the project is to develop a common ground for blockchain developers.
Brazilian developers will be able to develop their projects on the network. In addition, the project hopes to use the digital Real and tokenized assets later on.
In conclusion, Campos Neto noted that most central banks lack coordination in designing CDBCs. He believes this disorder can create more issues for the central bank over time. Explaining his statement, he stated that
“From the central banks I have met, they all have different approach to the CBDC idea. Some are looking to develop a decentralized method. Meanwhile, others want to create an automated multi-tiered payment gateway.”
Neto stated that with such disorganization, having a centralized crypto platform is a bad idea. Hence, most central banks should work towards a decentralized system.
