Pix offers benefits similar to those of central bank digital coins, points out 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/ The BIS, known as the “central bank of central banks”, published 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 may 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 forms of so-called “digital money”: digitized 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 brought by these assets are already similar to those provided by fast payment systems (FPS, in English). And Pix is presented as one of the largest and most successful examples of this group.

According to the BIS, both FPS and CBDCs “can increase financial inclusion and social welfare”, even though they “make the demand for already established services less elastic and, therefore, 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,” the organization states in the report.

Drex will not focus on retail

It is important to highlight, however, that the Central Bank's plan for Drex would not be a retail-focused use. In the past, the very authority acknowledged that Pix was already solving 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 version of the real on blockchain for operations of financial institutions. Subsequently, the Central Bank expanded the scope of the project and began to refer to Drex as a new digital public infrastructure for the financial market that would include the CBDC.

In November of this year, the BC decided to close the testing platform of 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, such as those studied by the BIS.