Pix has the same benefits as central bank digital coins, says BIS

Source: Exame Original Title: Pix has the same benefits as central bank digital currencies, says BIS Original Link: https://exame.com/future-of-money/pix-tem-mesmos-beneficios-moedas-digitais-bancos-centrais-estudo-do-bis/ BIS (central bank of central banks) released a new study suggesting that Pix has already provided Brazil with benefits similar to the potential impacts of a CBDC (central bank digital currency), which could reduce the importance of Drex in Brazil. The analysis is part of a broader survey on the increasing digitization of money.

The study focuses on three modalities of so-called “digital money”: digitalized bank deposits, CBDCs, and tokens from private platforms. In the case of CBDCs, the organization sought to understand the functioning and impacts of these digital currencies created on the technology behind blockchain networks and issued by central banks.

Regarding CBDCs, the BIS assessment is that most of the benefits provided by these assets are already similar to those offered by fast payment systems (FPS, in English ). And Pix is highlighted as one of the largest and most successful examples of this group.

According to the BIS, both FPS and CBDCs “can enhance financial inclusion and social welfare,” even though they “make the demand for already established services less elastic and thus increase the equilibrium rates for merchants,” effectively raising some costs.

“In our rather simple setup, a retail CBDC is essentially equivalent to a FPS. This suggests that introducing a retail CBDC may not be a top priority for countries where an efficient FPS is already in operation,” states the organization in the report.

Drex will not focus on retail

It is important to emphasize, however, that the Central Bank's plan for the Drex would not be focused on retail use. In the past, the authority itself acknowledged that Pix already solved a good part of the problems related to CBDCs, and that therefore it would be necessary to think of other use cases for the initiative.

Because of this, the Central Bank began to plan Drex as a wholesale CBDC, effectively serving as a blockchain version of the real for operations of financial institutions. Subsequently, the Central Bank expanded the scope of the project and began to refer to Drex as a new public digital infrastructure for the financial market that would include the CBDC.

In November of this year, the BC decided to end the testing platform for Drex and redirect the project, going beyond the use of blockchain technology. As a result, it is still unclear how close the project will be to a typical CBDC, like those studied by the BIS.