Brazil Announces Pilot For Digital Currency Seeking To Leverage Financial Services

• Brazil's central bank announced the start of a digital currency pilot project on Monday, March 6, aiming to replicate the success of its instant payment system Pix to popularize financial services in the country.
• According to Fabio Araujo, coordinator of the initiative at the bank, the public’s use of the digital currency should begin at the end of 2024, after the completion of the testing phase - which will include buying and selling of federal public bonds among individuals - and its subsequent evaluation. 
• Araujo stressed that the concept of the Brazilian central bank digital currency (CBDC) was not intended to leverage digital payments, as this is already being done on a large scale with Pix (launched at the end of 2021). But rather bank deposits would continue to exist within the Brazilian CBDC, only being registered in a more modern environment, meaning that financial institutions would not lose this source of funds for credit generation.
• This digital environment is set to reduce the costs of credit, the cost of improving the return on investments and bring the possibility of financial inclusion for people, including great potential for new service providers and fintechs to gain access to the market and offer new services.

(Source: Reuters)