Today, an American economist, Robert M. Townsend during the Workshop The Tokenization of Finance shared his views on Brazil’s position in CBDC adoption. The country has remained very active in the CBDC technology with many Brazilian banks trying to improve the country’s position in the digital asset industry.
During the Workshop The Tokenization of Finance, various topics have been discussed from the challenges of implementation to the benefits that will be delivered by central bank digital currency (CBDC) in the future. According to the reports, the Bank of Brazil sees CBDCs as a type of digital currency which do not harm, coexist, provide innovations and efficiency. Additionally, the officials participating in the Workshop unveiled the difference between stablecoins and CBDCs. The central bank digital currencies (CBDC) is backed by the state and consists of legal tenders discharging powers that other one doesn’t have. The CBDCs also have some risks associated with it like money laundering/ finance terrorism (ML/FT), privacy and data protection, and regulatory frameworks.
In the “Workshop”, American economist Robert M Townsend said that, “several other capabilities are being envisioned in the digital realm”. The Bank of International Settlement (BIS) and the international monetary fund (IMF) are paying close attention to this issue. Also, Brazil is a crucial international center in the development of CBDCs, says the American economist.
The Latin America region is emerging as a hotspot for central bank digital currency (CBDC). In April 2023, Peru, the coastal country of the South American continent, decided to embrace the CBDC technology. The Central Reserve Bank of Peru has recently published a paper it said would be the first in a series to examine the need, design, and timeline of the Peruvian CBDC. Peru faces significant challenges. The country’s population is underbanked by about 50%. Nearly 79% of unbanked people live in “non-poor” households, although only three-quarters of them have any savings.
The Latin American countries adopted modern payment systems very quickly and developed themselves as an international hub in CBDC and cryptocurrency. A few months ago, credit card giant MasterCard collaborated with the world’s largest cryptocurrency exchange, Binance, to launch a prepaid crypto card in Latin America. After Argentina in August, Brazil is the second nation where Binance has made the product available. Brazil is one of Binance’s top 10 international markets, the release claims.