The Digital Real Project: A Brazilian Initiative for a Central Bank Digital Currency
The digital real project, a Brazilian initiative for building a central bank digital currency, is advancing toward its possible issuance. Recently, Mercado Bitcoin, a local exchange, conducted a series of pilot tests designed to examine the interconnection of a tokenized version of the digital real, using the Stellar network as a public blockchain.
The tests included all of the steps that a regular user would have to conduct for the use of a tokenized, on-chain version of the digital real, and included traceability, know your customer and antifraud procedures, derived from a digital decentralized identity system. The digital identity tasks were conducted by Clearsale and CPQD, which handled ID and fraud prevention processes in order to make these transactions compliant with Mercado Bitcoin Pay, the tool used by Mercado Bitcoin to process the transactions.
The successful completion of the tests shows that public networks such as the Stellar blockchain can serve as proxies for the operation of the digital real. This is an important step in the development of the digital real project, as it demonstrates that the tokenized version of the digital real can be used in public blockchains following all compliance rules set by Brazilian laws.
The completed test is just a part of a whole array of projects that are being conducted to assess the behavior of the digital real in different situations. Mercado Bitcoin is part of the nine institutions selected by the Central Bank of Brazil to run these tests, as part of the special Laboratory of Financial and Technological Innovations (LIFT) challenge issued in 2022.
On Feb. 14, Roberto Campos Neto, president of the Central Bank of Brazil, revealed that a full pilot test would be conducted as soon as possible to deliver a comprehensive development route for the central bank digital currency on Dec. 2023, before his mandate ends.
The digital real project is an important step in the development of a central bank digital currency in Brazil, and the successful completion of the tests is a positive sign for the project. It remains to be seen how the project will develop in the coming months, but it is clear that the digital real project is making progress towards its possible issuance.