According to the coordinator of Drex at the Central Bank (BC), Fábio Araujo, the plans for Drex go beyond a simple currency, and could replace the entire Brazilian financial system. The statement was made during the Digital Assets Forum, which took place in São Paulo this Thursday (3).
Furthermore, Araújo also noted that Pix has solved all the problems with wholesale access and payments. He also said that next week, the agency will open registrations for new participants interested in joining the Drex pilot.
BC wants Drex as Brazil's financial system
Drex is more than a currency, it is a platform. Therefore, Drex's long-term goal is to be the Brazilian financial system where all negotiations will take place, revealed Fabio.
He also highlighted that the Central Bank does not yet have a set deadline for launching Drex to the general public. However, the idea is to release the digital currency for testing with the population after an extensive experimental phase. Araújo stressed that only after this stage will Drex be officially launched for large-scale use.
Furthermore, Fábio highlighted the importance of the DeFi environment for the BC. As the institution already has an interoperable environment through open finance, programmability is, above all, fundamental for Drex.
Here, it is important to take a step back and consider that we are not dealing with just a currency. This is a platform that already offers interoperability and composability in an integrated way. This concept was inspired by the Real-Time Payment and Settlement Network (RLN) diagram.
Drex goes beyond Pix
When we expanded this idea to the financial sector in general, we realized the enormous potential for competition and the market opening that this provides. The goal, from the beginning, was to go beyond what we already have with PIX. What else can this technology offer us?, he asked.
The Drex coordinator at the BC also pointed out that, although the term ‘programmable money’ can help us reflect on new possibilities, when delving deeper into this idea, it becomes clear that it can be misleading.
We are not programming money, but rather creating a public ecosystem, an API, that allows market participants to use this infrastructure to provide services to the population. Ultimately, that is our goal. As has been said, no one adopts a technology just because it seems interesting, but rather because it solves a problem. The ultimate goal of the Central Bank is to democratize access to financial services. How do we do that? asked Araujo.
While other features may be slightly better or worse than current technologies, composability is what allows us to achieve the goal of democratizing services, according to Fábio. It allows more startups and interested parties to enter the market and makes it easier for people to access financial services.
Trust and interoperability
There is a trust issue in interoperability protocols. The strategy we have defined for the evolution of DREX is to start with a single ledger, inserting everything that scalability allows and interoperating only what is necessary. We chose this approach because it is simple to migrate from a single ledger topology to one with interoperable ledgers, but the reverse path, from an interoperable system to a single one, is much more complex, detailed Araujo.
Furthermore, the Central Bank representative pointed out that care must be taken when choosing what to integrate into this core. Although the ledger used is active and cannot be shown, it offers good scalability qualities.
We need to clearly define what is essential to be within this main ecosystem and what can be maintained in satellite ecosystems, operating via interoperability. This is a crucial issue for market design, concluded the Drex coordinator.
When will the population test the Brazilian digital currency?
To this question, Araujo says that it will still take a considerable amount of time for the population to test.
What we are trying to do is to test this project with the population, to understand how they react and absorb these new businesses, and thus determine the level of scalability necessary for the system. When we think about interoperability, scalability and cybersecurity, these are fundamental aspects. We are working on them and we have good solutions for cybersecurity. As for privacy, the solutions are in the process of maturing.
With these points well established, the BC will move forward with testing with the population. At this stage, scalability and interoperability will not be limiting, and these tests will help us define the type of interoperability and the degree of scalability needed, he explained.
We have a scenario where there are two options: a completely separate system or a completely interoperable system. We will probably adopt as many internal elements as possible and interoperate only what is strictly necessary.
“Popular testing will help us define what should be integrated into the Mainnet and what can be interoperable. I don’t know if I’ve answered this completely, but the crucial point is overcoming the privacy challenge. Once this issue is resolved, we can move on to the second phase of the architecture and then move towards production,” concludes Araujo.
The article “Drex will be the entire financial system of Brazil”, says Central Bank was first seen on BeInCrypto Brazil.