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"The Brazilian central bank does not see a need for a retail digital real due to the success of its Pix retail payment system. Deputy Governor Renato Gomes reportedly pointed out that the motivation for Brazil's CBDC project has been less about improving retail payments but rather creating a wholesale framework for innovation based on DLT."

The Banco Central do Brasil (BCB) published the details of its digital real central bank digital currency (CBDC) technical testing. It will involve no real transactions (so it isn't a pilot). Its aim is to validate the use of a DLT solution on the Hyperledger Besu platform, evaluating programmability and the ability to comply with legal and regulatory requirements, mainly related to privacy, as well as its technological viability. The details include the criteria for selecting the ten participating institutions.

Visa developed a programmable finance platform that allows Brazilian soybean farmers to securely fund and sell their crop harvests on a permissioned version of the Ethereum blockchain. Partnering with Agrotoken, Microsoft, and Sinqia, Visa was one of nine finalists tasked with exploring innovative blockchain-based use cases for Brazil's real digital central bank-issued digital currency (CBDC) as part of the Banco Central do Brasil's most recent LIFT Challenge. The CBDC's programmability allows delivery and payment of assets and currencies to be automatically settled only when certain conditions are met, for more efficient capital usage and reduced counterparty risks. https://usa.visa.com/about-visa/newsroom/press-releases.releaseId.19706.html

Banco Central do Brasil is reportedly pushing out its CBDC pilot work from end-2022 to 2023. This is due to a workers' strike at the central bank, which impacted the original schedule.

To advance in the design of Real Digital, on 11/30/21, BC launched a special edition of the Real Digital Challenge Laboratory of Financial and Technological Innovations, the LIFT Challenge Real Digital, which aims to evaluate its use cases and technological viability . Based on the results obtained in the challenge, BC will advance in a pilot phase, which should start in the second half of 2023 and extend throughout 2024.

How did Pix become such a success? For starters, the central bank mandated participation by banks and other payment institutions with more than 500,000 transaction accounts. This created a critical mass of users and kick-started the network effects so that the open-loop payment platform could gain traction. The central bank amplified this mandate by facilitating community among the financial institutions participating in Pix. Prior to launch, they organized in-person meetings periodically to update everyone on key milestones and future plans. They solicited input to key decisions and created working groups to tackle specific issues. Secondly, Pix is available to any financial and payment institution licensed by the central bank that offers transaction accounts. Open participation was further fostered by allowing an indirect model of integration that significantly reduces the cost (eg connectivity costs associated with a direct integration). Thirdly, a consistent, simple and quick user experience was enforced by the central bank, including a flexible alias directory (based on phone numbers, email addresses or randomly generated string of characters), and standardized API and QR code technology. Finally, Pix is significantly cheaper for merchants (Pix charges 0.25% of the transaction amount versus 1-2% for credit cards and 3-4% for credit cards. Also with credit card transactions, the merchant may have to wait up to 30 days for their money.

"LIFT Challenge is a special edition of the LIFT Lab with a specific objective, carried out by Fenasbac in partnership with the Banco Central do Brasil (BCB). These challenges - focused on a mature audience of banks, payment institutions and fintechs - bring together market participants interested in developing a minimally viable product (MVP) that meets the objective of the edition and proposes innovative solutions that benefit the SFN (National Financial System) and the Brazilian population."

"Banco do Brasil is to work with German firm Giesecke+Devrient (G+D) to test offline payments as part of pilot trials of the Drex central banking digital currency (CBDC)". At this point you may be thinking that we're talking about the central bank, Banco Central do Brasil (BCB). However, Banco do Brasil is a commercial bank that purports to be part of the BCB's Drex pilot. It may be true that this offline payment test is done with the BCB's blessing, but the press release could make that clearer. https://www.bb.com.br/pbb/pagina-inicial/imprensa/n/67840/bb-e-gd-firmam-parceria-para-testar-pagamentos-offline-com-drex#/

The Bank for International Settlements (BIS) published a paper that examines the impact 4G mobile network introduction on the Brazilian banking sector. It found that 6% of private banks exited municipalities while their branches shrink on average 11% within five years of the introduction of this technology compared to municipalities that do not have it. By contrast, public banks, which have added responsibilities of being direct executioners of public policies, are not reactive to better mobile connectivity.

Banco Central do Brasil (BCB) has has extended the Drex project timeline into 2025 because the technological solutions tested in the first phase "did not present the necessary maturity to guarantee compliance with all requirements legal issues related to the preservation of citizens' privacy". The BCB decided that it would be inappropriate to advance testing to a pilot phase (where real users are involved) until there is "certainty about the ability to meet privacy requirements". The next phase will seek to incorporate new functionalities, such as the implementation of smart contracts within the platform, so that the private institutions participating in the project will be able to create services and business models on the network, without being limited to those designed by the BCB itself. https://normativos.bcb.gov.br/Votos/BCB/202466/Voto_do_BC_66_2024.pdf