On May 24, Brazil’s largest cryptocurrency and digital asset exchange Mercado Bitcoin, announced a partnership with the Stellar Development Foundation (SDF) to launch Brazil’s CBDC in 2022. According to an official Stellar Foundation post,
“Mercado Bitcoin will work on one of the nine projects promoted by the Laboratory of Financial and Technological Innovations of Brazil (LIFT), which was created to develop a “minimum viable product (MVP)” for a CBDC that meets the Brazilian government’s goals. In this situation, a “Minimum Viable Product” would be a CBDC solution that is functional enough to meet the Central Bank of Brazil’s minimum standards, thus giving the best possible product with the least amount of effort.”
The initiative was backed by the National Federation of Central Bank Servers Associations (Fenasbac) and Central Bank of Brazil (BC). All activities will focus on different usage for the Central Bank of Brazil’s proposed CBDC. Reinaldo Rabelo, CEO of Mercado Bitcoin, indicated that the company collaborates with Stellar as it wants to offer strong solutions using Stellar’s blockchain technology. This should satisfy all of the conditions for the Brazilian CBDC’s evaluation and possible approval. He stated:
“We are in a consortium of companies that have the structure and ambition to build robust solutions for the financial market through blockchain technology. Utilising the Stellar network will allow us to deliver a complete case for evaluation by the Central Bank.”
Denelle Dixon, CEO of the Stellar Development Foundation, stated that Stellar is looking into various studies to properly understand the several use cases for the future Real Digital (the Brazilian CBDC). They will be able to aid Mercado Bitcoin in the development of a blockchain product that has the potential to change the way Brazil interacts with money as a consequence of this new relationship. He mentioned:
“Stellar was designed for asset issuance, and its built-in compliance tools give Mercado Bitcoin a strong foundation to develop a solution with the features that Bacen expects to see”
The CBDC might be deployed in the second half of 2022, according to Brazil’s Central Bank Governor, Roberto Campos Neto. However, similar to the CBDC in Europe, they will first launch a trial version before becoming public.
He also indicated that the CBDC will be priced using the STR (Reserves Transfer Method), which he characterised as “a method that liquidates all assets (in Brazilian Reals) and is insured by the Real.” Furthermore, he claimed that with this new system, banks will be able to issue stablecoins on their deposits, as well as allow smart contracts and DeFi solutions via the CBDC platform of the Central Bank.
