Brazil CBDC Tracker

Brazil is in the pilot phase. The Banco Central do Brasil announced that it had launched a pilot project in March 2023, expanded it in July 2023, and plans to conclude it in late 2024.

CBDC History and Development

In May 2021, the Banco Central do Brasil released a set of CBDC design guidelines. Among the 10 guidelines, it was noted that Brazilian CBDC must be programmable, usable offline, not interest-bearing, compliant with anti-money laundering laws, and used in retail payments.

Banco Central do Brasil president Roberto Campos Neto gave a presentation in June 2021 on what he called, “moeda digital do Banco Central do Brasil.” He said the central bank had been studying CBDCs for years. He further said issuing a CBDC would reduce the use of cash, reduce illicit activity, improve cross-border payments, improve financial inclusion, and impact innovation. In closing, president Neto said the next step was to engage in public debate. (President Neto gave a similar presentation at the end of June and the end of August.)

In July 2021, Banco Central do Brasil director João Manoel Pinho de Mello gave a brief speech to announce the central bank would conduct a series of webinars to discuss CBDCs with academics and industry representatives.

In August 2022, Banco Central do Brasil president Roberto Campos Neto gave an update on the central bank’s innovation agenda. On one hand, he said a CBDC could reduce transaction fees and improve financial inclusion. On the other hand, he said there could be interoperability and scalability problems. He predicted a CBDC would be piloted in 2023 and launched in 2024. (President Neto gave similar presentations in September 2022, December 2022, and February 2023.)

The Banco Central do Brasil’s November 2022 financial stability report explored the potential impact a CBDC might have on the banking system. The report stated that the central bank’s “natural path is to provide the Brazilian population with a payment platform based on programmability—such as programmable money and smart contracts.” To mitigate potential disruptions to the banking system, the report suggests lowering reserve requirements.

In 2023, the Banco Central do Brasil changed the name of the CBDC to Drex. Since then, the Banco Central do Brasil has described Drex as “the [Brazilian] real in digital format.” The central bank explained: “The letters ‘d’ and ‘r’ refer to Real Digital, the ‘e’ comes from electronic and the ‘x’ brings the idea of connection, associated with the technology used. … All elements reinforce the idea of agility of the Central Bank’s digital currency, Drex.”

In March 2023, the Banco Central do Brasil announced that “The Drex Pilot is the testing phase for operations with the Brazilian digital currency, Drex, previously called Real Digital.” The pilot involves authorized institutions and simulated end users. The pilot involves 70 firms. The central bank claims that the Drex Platform operates on distributed ledger technology where “regulated financial intermediaries will convert balances of demand deposits and electronic money in Drex, so that their clients have access to various intelligent financial services.” A separate document detailed the different aspects of the pilot. For instance, the Banco Central do Brasil “will evaluate the benefits of programmability and guarantees of privacy that can be brought by the Drex Platform, developed based on the open-source platform Hyperledger Besu.”

The Banco Central do Brasil hosted a CBDC workshop in April 2023. The presentation covered CBDC issuance, functionality, and destruction.

Banco Central do Brasil director Otavio Ribeiro Damaso gave a presentation in May 2023 covering the central bank’s innovation agenda. The presentation largely mirrored Banco Central do Brasil president Roberto Campos Neto’s 2022 presentations.

In September 2023, the Banco Central do Brasil provided an update on the CBDC pilot. Notably, the central bank said it planned to use open-source smart contracts. However, it also said that there was no timetable for the pilot as the central bank needed to prioritize developing the underlying code. The central bank provided a similar update in December.

In May 2024, the Banco Central do Brasil announced that the Drex pilot would enter a second phase to “incorporate new functionalities and carry out new tests.” Later, in September, the Banco Central do Brasil kicked off the second phase of the pilot with the announcement that it was working with a host of outside groups. The pilot was set to explore several themes: assignment of receivables, credit collateralization, financing international trade, improving the foreign exchange market, creating liquidity, and more.

Banco Central do Brasil president Roberto Campos Neto said in October 2024 that one of the first questions that had to be addressed was related to Pix. If Pix works so well, why does Brazil need a CBDC? President Neto said, “I think the programmability [of a CBDC] is essential.” President Neto also said there has been an issue distinguishing whether the CBDC would be wholesale or retail. He said he thinks it is both.

Later in October 2024, the Banco Central do Brasil published two updates. The first update established rules for the next phase of CBDC development and announced that the central bank would be accepting applications from companies interested in participating in the pilot. The second update officially announced the start of the second phase of the Drex pilot with a list of 13 themes the central bank hoped to explore. Participants included Visa, Santander, Mastercard, Microsoft, and many others.

Human Rights and Civil Liberties Concerns

Brazil is considered free in Freedom House’s 2023 Freedom in the World report—earning a 72 out of 100. However, there are still many problems within the country. When it comes to the issuance or use of a CBDC, however, the most relevant issue currently experienced is the persistence of government corruption. A CBDC could worsen this issue.

“Corruption and graft are endemic in Brazil, especially among elected officials,” according to Freedom House. The existence of pervasive corruption is a major concern with CBDCs because it calls into question any promises that might be made by the government to limit surveillance, control, or other risks of CBDCs. Furthermore, the existence of corruption calls into question whether CBDC policies might be designed to exert political favoritism through subsidies, price controls, or other targeted restrictions.

For additional information on concerns regarding violations of human rights and civil liberties, see the following reports by Amnesty International, Financial Tyranny Index, Freedom House, Human Rights Watch, Privacy International, and the U.S. Department of State. For additional information on concerns regarding the risks of CBDCs, see the following webpage and report by the Cato Institute: The Risks of CBDCs and Central Bank Digital Currency: Assessing the Risks and Dispelling the Myths.

For additional information regarding metrics, the methodology page explains each of the data points and provides their respective sources.