Banco Central do Brazil has recently announced the selection of 14 firms to participate in its central bank digital currency (CBDC) pilot program, as part of its efforts to launch a state-backed digital currency. The pilot program will primarily focus on developing a wholesale CBDC, with a majority of the participants being commercial banks that prioritize privacy and programmability.
The Brazilian central bank has expressed its interest in investigating a delivery versus payment (DvP) protocol to facilitate the settlement of government bonds, with tokenized bank deposits being utilized to enable transactions on the consumer side and explore the possibility of a retail CBDC; after receiving over 100 proposals, the Executive Management Committee (CEG) has selected 14 firms, including Bradesco, Nubank, Santander Asset Management, Itaú, Bank BV, BTG Bank, and Segura, to participate in the pilot program.
The selected firms met the eligibility criteria of being a part of the National Financial System Network and possessing adequate experience in distributed ledger technology (DLT), with the Brazilian central bank emphasizing the importance of establishing clear and transparent guidelines and procedures in light of the complex nature of the pilot program.
In addition to the aforementioned banks, the list of selected firms for the Brazilian central bank’s CBDC pilot program includes notable payments and technology companies such as Visa, Foxbit, LoopiPay, BBChain, and Microsoft, all of whom will collaborate with the central bank in conducting experiments centered on the instant settlement of government bonds among customers from various financial institutions; this initiative follows the successful completion of the Real Digital Lift Challenge, which explored the potential use cases of CBDCs in DeFi, PvP, and IoT and featured a diverse range of participants from DLT firms to commercial banks and technology enterprises, with Microsoft’s SME financing experiment receiving praise.
According to data from the International Monetary Fund (IMF), more than 100 central banks have expressed interest in exploring CBDCs, with some regulators opting for a wholesale version over a retail version; in response to this growing trend, the IMF has released a CBDC handbook that offers technical assistance and aims to promote consistency in the global development of CBDCs. While Denmark, Ecuador, and Finland have publicly rejected the idea of CBDCs, China, Russia, and India are intensifying their efforts in this area.
