In this sense, the Central Bank of Brazil (BCB) has launched and monitored three specific cases of financial innovation that deserve to be evaluated by the Argentine authorities:
1) The real-time payment solutions provided by the Central Bank of Brazil (Pix),
2) The rules that enable a more open financial infrastructure (open banking and open finance), and
3) The launch of a public digital currency (the digital real).
Let’s go by parts.
instant payments
Regarding the role of the BCB in the payment system, many countries, including Brazil, have developed real-time payment infrastructures in recent years.
The Pix (instant payment system) in Brazil, launched at the end of 2020, has managed to become the most popular payment method in that country, reaching a fabulous number of 143 million users in just a few years.. With this initiative, our main Mercosur partner has become one of the world leaders in developing global public payment systems in real time, second only to India, which built the Unified Payments Interface (UPI), which already has more than 300 Millions of active users.
As the PIX is a development that allows free transactions with the ease of being able to transfer money at any time to users of the phone’s contact list (by means of the so-called “PIX key”), its adoption has been practically universal in Brazil. . In this way he has enabled the inclusion of a huge portion of the Brazilian economy in digital payment methods, that it is informal or, because they have very low resources, they did not have access to the banking system.
open finance
Another of the main trends observed in the global financial world and which aim to create an increasingly dynamic financial infrastructure is the so-called open banking (open banking) as a previous step to open finance (open finance).
These modalities tend to empower bank customers, allowing them to at its discretion share your financial information with other financial institutions, banking and non-banking, such as fintechs or startups, through APIs (application programming interfaces), expanding the range of financial services that users can choose from.
According to the report “Fintech Agenda towards 2025”, it is estimated that approximately 90% of Latin American banks have already begun to implement open finance strategies. Brazil, like Chile and Colombia, have approved standards that are in force and make possible the modular implementation of these new modalities.
The open banking of Brazil allows, for example, that each client can share the data of operations of credit card consumption or placements at fixed terms and others, between banks, and in this way compare the offer of benefits and quality of services, forcing the different institutions to compete. This encourages the different actors of the financial ecosystem to provide better and cheaper services, empowering the user, reaffirming the idea that he is the “owner” of his data, and not the financial institution.
Open finance in Brazil is also regulated by the BCB and is being implemented by modules, projecting in its last phase the possibility that users can share their data with investment or insurance companies, among other financial products..
the digital real
Finally, another relevant challenge that is being developed Brazil is launching a digital currency issued by its Central Bankcalled CBDC for its acronym in English (Central Bank Digital Currency).
The analysis of CBDCs began to be timidly considered by very few central banks at the end of the last decade. However, the high degree of adoption of cryptocurrencies, together with the pandemic, motivated these initiatives throughout the planet, and today -according to what was reported by the Basel Bank for Payments- almost 100 central banks are analyzing their implementation.
While some countries like the Bahamas have implemented their public digital currency during the pandemic, nations like China is carrying out pilot tests in which more than 200 million citizens of that country are already participating.
Returning to Brazil, currently the BCB is launching the pilot test of Real Digital, its legal tender digital currency, in which 14 relevant institutions participate such as Bradesco, Banco do Brasil, Itaú Unibanco and others.
Its use aims to the universe of retail payments With a start-up horizon towards the end of 2024, promoting online operations and the development of innovative models based on technological evolutions such as smart contracts, the Internet of Things (IoT) and programmable money.
The technological support selected for the pilot test of the digital real resides in a Blockchain (called Hyperledger Besu), that is, the same technology used by cryptocurrencies.
There are two other relevant aspects to consider regarding the Real Digital pilot project. One is that the initiative incorporates the Brazilian Treasury Secretariat, since it foresees the tokenization of payments for the purchase of federal public securities.
And second, that its development would make interconnection with CBDCs of other Central Banks compatible in order to achieve greater financial and commercial integration.
crypto assets
Parallel to this public digital currency initiative, the Brazilian government recently signed a decree designating the Central Bank of that country as regulator of the crypto-assets market.
This dual role of the Central Bank of Brazil as issuer of public digital currency and regulator of the crypto asset market, Based on blockchain technology, it would allow a future harmonization and integration of the entire financial digital universe public and private under the coordination of the banking regulator.
A concrete example of this confluence between public and private digital assets occurred last week when the BCB authorized the largest crypto exchange of Brazilian origin, Mercado Bitcoin, to participate in the digital real pilot project.
The situation in Argentina
Regarding the payment system, the Central Bank of the Argentine Republic has opted for a different strategy promoting transfer payments 3.0 from the regulationspointing to consolidate an open and fully interoperable system for electronic transfers and payments.
At the moment Argentina has not advanced in creating a public digital currency, whose development could, among other things, help achieve greater commercial, financial and economic integration with Brazil or other countries (such as China) have this instrument.
Likewise, Argentina could design a regulatory framework for the development of open finance, a trend that seems unstoppable worldwide, being able to find legal examples to adapt to our reality in neighboring countries such as Brazil, Chile or Colombia.
Finally, all these initiatives could be harmonized with regulations that include to the universe of crypto assets in order to enhance the Argentine financial infrastructure with a comprehensive lookproviding greater investment and development tools to consumers, companies and entrepreneurs.
The challenges we face are enormous, and each of these issues deserves an unprejudiced and crackless discussion, that allows a rational evaluation of the benefits and disadvantages of advancing in this type of initiatives and in others linked to technological advances. Cooperative work between public and private actorsusing what we know of successful experiences from other countries would seem to be a realistic and virtuous path to follow.
Carlos Weitz– Former president of CNV and Professor of Fintech, Bigtechs, Cryptoactives and Digital Currencies. Buenos Aires’ University
Daniel Diaz – Professor of Information Technology. Rosario National University
Source: Ambito
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