In a paper recently published by the Bank for International Settlements (BIS), Fabio Araujo, an economist at the Central Bank of Brazil (CBB) who’s also responsible for the country’s central bank digital currency work, revealed that the monetary authority will have greater control over the population’s money once its CBDC is rolled out. Through the so-called Real Digital, the central bank will be able to halt bank runs and impose other restrictions on citizens’ access to money.
Real Digital, the digital version of Brazil’s national currency, has been debated at the central bank since 2015 and will have its first tests in 2023 through nine solutions presented by private companies during the recent Lift Challenge event that was carried out by the CBB.
Cointelegraph reported that the value of the upcoming CBDC would be pegged against the national fiat payment system STR, also known as the Reserve Transfer System.
Brazil could soon be the next Latin American nation to regulate cryptocurrency. A bill has been in the works since 2019 and is now finally set to hit the Senate floor for a vote. https://t.co/ZYEfrsEwm8
— Cointelegraph (@Cointelegraph) February 23, 2022
Through Real Digital, the central bank says it wants to enable so-called smart payments within a regulated environment. Smart payments include smart contracts, transactions with Internet of Things devices and even Decentralized Finance (DeFi) applications.
In the BIS document, Araujo said the main objective of introducing a CBDC is to provide entrepreneurs with a safe and reliable environment to innovate through the use of programmability technologies that make smart payments a reality.
“Technologies available for smart payments, as seen in crypto assets, make room for new business models and are better suited to meet the population’s demand,” he said.
Related: Fed paper looks at the potential effects of CBDC on monetary policy
Central Bank may ‘stop’ withdrawals
In the paper, Araujo highlights…
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