The financial market has been experiencing a strong wave of innovation in recent years, driven by the strategic agenda of the Central Bank focused on financial inclusion, greater competition and, of course, more transparency in relations with consumers. Words like PIX, open banking, among others, gained space in the vocabulary and in the daily life of the Brazilian consumer’s journey.
Since 2020 a new concept has gained strength on the agenda of this innovation agenda: CBDCs (Central Bank Digital Currencies), digital representations of the physical currency currently in circulation in the economy. In Brazil, the CBDC is called Real Digital and has generated great expectation among market players.
The Real Digital is expected to provide more security, privacy and traceability as it will be developed on the blockchain. The fact of using this technology provides greater “programmability” to the national financial system, that is, the possibility of using the coin to easily solve real-life use cases through protocols such as decentralized finance (DeFi), delivery versus payment (DvP) and the Internet of Things (IoT) .
Also, In the opinion of the Central Bank, innovation must accompany the technological evolution of the national economy to contribute with innovations and new business models, without losing the essence: The idea is to continue to be an instrument to maintain monetary and financial stability.
And how does Real Digital change payment flows?
According to Marilyn Hahn, the richness of this technology lies in the disintermediation and viability of what we call smart contractsthat is, programmable smart contracts that do not necessarily need an intermediary or facilitator level.
“Imagine the following scenario: you want to buy an apartment and in order to finalize the purchase and receive the deed of the property, you need to transfer a certain amount to the owner. The writing happens at the same time, generating asymmetry in the process and risks for the businessMarilyn comments.
To facilitate the transaction and have more confidence that everything will go well, the other party (who does not know you) hires a real estate agent, who charges 20% for mediating the transaction. You will probably see this fee reflected in the final price of the property, even so, the real estate agency does not guarantee the total mitigation of the exploitation of the operation.
In a flow with Real Digital -if the property is registered in the metaverse and tokenized- it is possible for you to complete this transaction in a moment, sending the payment with the information of the purchase order, which will be validated by the token of the apartment, confirming the event. Instantly, the deed to the property is yours and the money will be in the account of the person who sold the property. Impressive, right?
Now let’s take the assumptions of this simple use case to another level and Let’s think about sectors of the economy with complex and widely dispersed payment systems, such as agribusiness. Rural credits and insurance that are contracted more easily directly from applications linked to cultivation, giving the investor more predictability of production, as well as programmable money for specific and intelligent destinations within business management are just the beginning and can mean a reduction in the costs of loans and in the operation of the transaction.
For the co-founder, the use of Real Digital in traditional sectors of the economy, less mature in relation to digital transformation, such as agribusiness, health and industry in general, for example, is one of the great expectations of market agents .
Despite high penetration, PIX has not yet been able to simplify B2B payment chains. Although we have more than 122 million people who use instant payment, this number decreases significantly when we talk about legal entities, which add up to just over 9.7 million users.
“We can also include cross-border payments and the reduction of barriers to the internationalization of these companies in this discussion: a study by JP Morgan estimates that it would be possible for companies to save some 100 billion dollars in international transaction costs, since expects that the adoption by digital currencies will be global, since several countries already have initiatives on the subject, the greater access and interoperability that blockchain technology provides is totally win-win for global tradeMarilyn concludes.
Despite the anxiety that has been generated around the most diverse possibilities that Real Digital allows, the product should be officially launched by the Central Bank for testing only in 2023. In addition, there is a great challenge in terms of infrastructure of the national financial system. itself that supports the current scenario and not the processing of a blockchain technology, for example. Finally, there is also a need for a better understanding of the regulator in relation to the new guidelines of national monetary policies and how all the liquidity and credit risk management will be with the new technology.
Even with these challenges, CBDCs should bring a new range of possibilities to all participants in the financial system.in addition to promoting a series of innovations not yet mapped in the chain.
Disclaimer: The information and/or opinions expressed in this article do not necessarily represent the views or editorial line of Cointelegraph. The information set forth herein should not be taken as financial advice or investment recommendation. All investment and commercial movement involve risks and it is the responsibility of each person to do their due research before making an investment decision.
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