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Brazil central bank selects Visa, 13 other banks for new CBDC pilot

Banco Central do Brazil has confirmed the selection of 14 firms to assist in its central bank digital currency (CBDC) pilot as part of its push to launch the state-backed digital currency.

The Brazilian central bank made the announcement noting that the new pilot will revolve around developing a wholesale CBDC. Following this fact, most participants appear to be commercial banks with a firm focus on privacy and programmability.

The central bank is keen on exploring a delivery versus payment (DvP) protocol to allow for the settlement of government bonds. The Brazilian central bank disclosed that tokenized bank deposits would be deployed to set transactions on the consumer side of things, allowing the banking regulator to explore a retail CBDC.

The Executive Management Committee (CEG) selected 14 participants after being inundated with proposals from over 100 firms. Participating firms include Bradesco, Nubank, Santander Asset Management, Itaú, Bank BV, BTG Bank, and Segura.

The firms earned their selection after meeting the requirements of being part of the National Financial System Network and having sufficient experience in distributed ledger technology (DLT).

“Given the complexity of this environment, it is very important to have well-defined and transparent rules and procedures,” an official from the central bank said.

The list extends to payments and technology firms, including Visa (NASDAQ: V), Foxbit, LoopiPay, BBChain, and Microsoft (NASDAQ: MSFT). Each of the selected firms will assist the central bank in experiments testing the instant settlements of government bonds amongst customers from different financial institutions.

Brazil’s latest pilot follows the successful completion of the central bank’s Real Digital Lift Challenge, designed to probe CBDC use cases in DeFi, PvP, and the Internet of Things (IoT). The study featured a healthy mix of DLT firms, commercial banks, and technology enterprises with Microsoft’s SME financing experiment earning plaudits.

An avalanche of pilots

Data from the International Monetary Fund (IMF) shows that over 100 central banks have indicated a desire to explore CBDCs, with some regulators opting for a wholesale iteration over a retail version.

The IMF announced the publication of a CBDC handbook to assist the growing number of central banks looking to launch digital versions of their legal tender. Aside from offering technical assistance, the IMF is also keen to establish uniformity in the global development of CBDCs.

Denmark, Ecuador, and Finland have publicly dismissed the idea of CBDCs, while China, Russia, and India are upping the ante in their developments.

To learn more about central bank digital currencies and some of the design decisions that need to be considered when creating and launching it, read nChain’s CBDC playbook.

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