• The central bank of Brazil has partnered with 14 selected institutions, including private banks like Nubank and Bradesco, and MNCs like Microsoft and VISA, for the pilot testing of its central bank digital currency (CBDC) called Digital Real.
• Starting mid-June 2023, the participants will be onboarded onto the Digital Real Pilot platform, where simulated transactions will be conducted to evaluate instant settlements in government bond trading, focusing on wholesale and end-customer levels.

In a recent development, the central bank of Brazil has announced its partnership with 14 selected institutions for participating in the pilot testing of its central bank digital currency (CBDC) aka Digital Real.

On Wednesday, May 24, the central bank published the list which includes the names of private banks such as Nubank, Bradesco, and Itaú Unibanco. Additionally, the largest public bank in Brazil – Banco do Brasil –  as well as the local stock exchange B3 have announced participation. Apart from the traditional financial institutions, multi-national companies (MNCs) such as Microsoft and VISA have also been chosen to participate.

Starting mid-June 2023, the central bank of Brazil will start incorporating participants into the Digital Real Pilot platform. So far, the bank has received 36 interest proposals from a total of over 100 institutions which includes players from different financial sectors, cooperatives, crypto companies, payment institutions, public banks, financial market infrastructure operators, and payment settlement institutes.

As said, during the next month of June 2023, the onboarding of all participants into the Digital Real Pilot platform will begin. As part of the pilot program, simulated transactions will be conducted to evaluate instant settlements in government bond trading, focusing on wholesale and end-customer levels. The central bank aims to assess privacy measures, information exchange among participants, and the integration of programmability functions with interoperability.

Brazil’s Push for A CBDC

Brazil kickstarted the pilot program for its CBDC Digital Real last year in 2022. As obvious, the value of the digital real shall be pegged against the country’s national currency, the real. As reported, Brazil is currently conducting the pilot test of its Digital Real on the Stellar blockchain network.

The pilot test being conducted by the Brazilian central bank is utilizing the Stellar blockchain due to its high functionality and suitability for widespread enterprise use. The tests encompass crucial elements such as Know Your Customer (KYC) verification, anti-fraud measures, traceability, and an on-chain decentralized identity process.

While the Brazilian central bank has opted for the Stellar blockchain in the pilot phase, there is no guarantee that it will be the chosen blockchain for the actual issuance. The testing period for Digital Real will involve the trading of federal public bonds between individuals.

According to Fabio Araujo, a key figure in Brazil’s CBDC project, the Digital Real will be developed as a payment instrument running on Distributed Ledger Technology (DLT). Moreover, it will facilitate retail financial services, allowing tokenized deposits to be settled within Brazil’s financial and payment systems institutions.

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