Type of official cryptocurrency of the Central Bank (BC), the digital real entered the testing phase this Monday (6), through a platform that allows the registration of various types of financial assets. The tool should only be available to account holders at the end of 2024, when it will start receiving tokenized deposits (real assets converted into digital ones).
Tokenization can be defined as the digital representation of a good or a financial product, which facilitate negotiations in virtual environments. Through a series of codes with requirements, rules and identification processes, assets (or fractions thereof) can be bought and sold in virtual environments.
According to the coordinator of the Central Bank project, Fabio Araujo, the digital real will work as a large-scale Pix, which will allow instant transfers of large wholesale values, such as large companies and financial institutions. Pix, he explained, caters to retail, being used by individuals, entrepreneurs and small businesses.
“The digital real will be a means of payment to support the offer of retail financial services. It is the Pix of financial services, which intends to expand the products [digitais] in the market”, said Araujo. “The focus of the project is tokenized real-world assets, not crypto assets,” he pointed out.
Phases
In this first phase, BC begins to develop a test platform that registers assets of various types and natures. According to Araujo, the environment is now starting to be developed so that tests can be started with the new monetary system. The platform chosen was Hyperledger Besu, which operates with open source code, which reduces costs with licenses and royalties of technology.
Network compatible with Ethereum technology (a type of cryptocurrency), Hyperledger Besu allows testing in controlled environments and guarantees the privacy of transactions. Based on this platform, BC expects the development of online applications by companies. According to the agency, the idea is that this development takes place in a decentralized way, as in the payment initiators, a tool that allows payments outside of bank applications.
In the testing phase, the ledger platform will not be tied to the Real Digital plan guidelines, announced in May 2021. The Central Bank will use a distributed ledger technology (DLT, Distributed Ledger Technology) .
Through the distributed system, each participant in the financial sector will have to contribute its share of the infrastructure. In April, the BC will organize a workshop with financial institutions and technology companies to pass on the guidelines. In May, the monetary authority will choose the participants of the pilot project.
With the participants defined, there will be tests of transactions with the digital real in a simulated environment, without real values. The assets to be used in the pilot project will be the following: deposits from bank reserve accounts, settlement accounts and the National Treasury single account; demand bank deposits; payment accounts of payment institutions; and federal public bonds.
According to the general coordinator of National Treasury Public Debt Operations, Luis Felipe Vital, the Treasury will participate in the testing phase to allow the construction of cheaper and more efficient technologies for trading public securities in the primary market (when the Treasury itself issues papers) and in the secondary (when bonds already issued change hands).
“Today, the bond auctions take place in one of the infrastructure structures together with the Central Bank. If there is a need for adjustments, they will be built during this testing phase”, said Vital. In simulated operations, a fictitious investor will buy public securities through the bank’s application that will connect to the testing platform. The tests will also include the possibility of settling loans with resources from long-term investments without “dismantling the portfolio” (without getting rid of the entire financial application).
Conclusion
The testing phase, explained Araujo, will be completed in December of this year. In March 2024, the results will be evaluated. If it manages to support simulated transactions, the Hyperledger Besu platform will be used to assemble the digital real. “We want to reach the maturity of the project from the end of 2024. Our schedule foresees opening participation of the population at the end of next year”, declared the project coordinator in BC.
