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Brazil’s central bank announces the official name of its digital currency

Brazil

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TL;DR

  • The Central Bank of Brazil has announced the official name of its digital currency in a live broadcast.
  • The country aims to reshape financial services and governance.

Brazil’s central bank has officially named its new central bank digital currency (CBDC) “DREX,” short for “digital real.” The announcement came during a live broadcast on the Central Bank of Brazil’s YouTube channel. The name is a fusion of “digital,” “real,” “electronic,” and “transaction,” signifying the innovative elements of the currency. DREX’s launch builds on the success of Pix, a Brazilian platform that facilitates instant, fee-free electronic fund transfers using QR codes and user-friendly identifiers like phone numbers and email addresses, instead of traditional account numbers.

Brazil’s central bank reveals the makeup of its CBDC

The central bank also unveiled the visual branding for DREX, featuring two arrows leaning into the ‘D,’ symbolizing the transition of the Brazilian real into the digital realm. The digital real initiative involves authorized entities minting the CBDC using distributed ledger technology, akin to blockchain. DREX will support various operations, including the buying and selling of public treasury bonds. These transactions will be processed swiftly and supported by Web3 infrastructure for token creation, registration, and burning.

However, only authorized financial institutions will handle the actual tokenized real, ensuring regulatory compliance and security. The introduction of DREX is expected to have a tangible impact on the lives of Brazilians by expanding financial services and accessibility. The CBDC is projected to simplify processes like obtaining loans, accessing investment options, and securing insurance, thus promoting financial inclusion. Several potential use cases for DREX are being tested as part of the digital real pilot project, set to conclude next March.

The country aims to reshape financial services and governance

Maria Rita Serrano, president of Caixa Econômica Federal, Brazil’s largest public bank, envisions the possibility of government benefits, such as Bolsa Família, being distributed through digital real in the future. This approach aims to enhance financial digitalization and social inclusion, capitalizing on Caixa’s extensive reach across the country. Furthermore, Senator Carlos Portinho has suggested that the digital real could enable municipalities and state entities to establish cryptocurrency wallets, a practice not currently permitted by law.

He believes that blockchain technology inherent to DREX could enhance transparency and oversight of public funds, preventing misallocation and promoting accountability. In July, the Central Bank published the digital real pilot project’s code on GitHub, allowing public scrutiny of the system. Developers identified certain problematic functions within the smart contract, including the central bank’s ability to freeze accounts, alter balances, confiscate funds, and mint new units of digital currency.

The central bank clarified that these functions align with existing Brazilian legislation and are necessary to ensure compatibility with the National Financial System. As Brazil ventures into the realm of CBDCs with the introduction of DREX, the country’s financial landscape stands poised for transformation. With potential benefits ranging from simplified financial services to increased governmental transparency, DREX’s journey from concept to implementation will likely be closely watched by both citizens and global observers.

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.

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Owotunse Adebayo

Adebayo loves to keep tab of exciting projects in the blockchain space. He is a seasoned writer who has written tons of articles about cryptocurrencies and blockchain.

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