Central bank digital currencies, or CBDCs, will eventually hit the market, whether one wants it or not. Brazil is one of the many countries where a CBDC can make a significant impact. However, few people realize the country is working with Ripple to build a prototype, even though very few details are public at this time.
Brazil Is Developing a CBDC
- Similar to other countries, Brazil wants to explore the concept of a CBDC in the future.
- Many factors remain unknown, including the deployment, implementation, and even the name.
- Banco Central do Brasil, the country’s central bank, studies and monitors international efforts and discussions regarding central bank digital currencies.
- Moreover, the bank leans toward implementing such a currency in Brazil, depending on the findings of a dedicated study group created in August 2020.
- Development of a Brazilian CBDC appears underway, and Ripple is involved in the process.
- No further details on the development are known, other than a prototype being put together behind the scenes.
- This currency may reside on the XRP Ledger (XRPL), which seems well-suited for central bank digital currencies and other instruments.
- Technology-wise, the BCB confirmed it aims to maintain a local system open to adopting international standards to achieve interoperability with other central banks across different jurisdictions.
- The BCB and Ripple have met in early 2020 to discuss the development of a CBDC.
- Other parties, including R3, have eyed Brazil in the past as a region of interest to explore central bank digital currencies.
- Ripple maintains an office in Sao Paulo and aims to expand its presence across Latin America.
- Ripple’s centralized and permissioned network can be of great value to countries pursuing a central bank digital currency.
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