Brazil’s central bank announces payment platform to compete with crypto
PIX hopes to provide 24/7 payments in up to 10 seconds
The Central Bank of Brazil (BCB) has outlined its plan to create a new payment service that will compete with increasingly popular crypto platforms.
Named PIX, the BCB hopes that the project will facilitate payments in up to 10 seconds at any time through mobile apps, internet banking and cash machines.
The bank’s president Roberto Campos Neto admitted at the project launch on Wednesday that the cryptocurrencies’ increasing popularity had jolted the BCB into action, stating:
“PIX came from the need for people to have a payment instrument that is both cheap, fast, transparent and secure. If we think about what has happened in terms of the creation of bitcoins, cryptocurrencies and other encrypted assets, it comes from the need to have an instrument with such characteristics.”
In the past 12 months central banks throughout the world have sought to innovate and adopt the technology pioneered by cryptocurrencies. The central banks of the eurozone, the United Kingdom, Sweden, Switzerland, Canada and Japan have started to share research as they all develop central bank digital currencies (CBDC).
Last month Hiromi Yamaoka, the former head of the Bank of Japan’s division overseeing payment and settlement systems admitted that such collaboration has been undertaken in order “to keep something like Libra in check.” Led by Facebook, the Libra Association hopes to develop a global digital stablecoin to facilitate cross-border and internal payments for billions of people.
While some have welcomed the increasing institutional interest in the technology pioneered by cryptocurrencies, others are less content. Cryptocurrencies attracted interest in part due to the privacy they provided and the opportunity the afforded users to regain financial independence from central banks.
The increasing digitisation of traditional national currencies however threatens to subvert these initial aims. The ruling Communist Party of China, for example, has welcomed the idea of a digital yuan and is currently endeavouring to become the first country in the world with a digitised currency.
Roberto Campos observed that PIX will “help to remove from people this need to have physical money, as this generates a great cost for society.” This may make payments across Brazil more efficient and will crucially provide the state with greater data on the spending habits of everyday Brazilians. The BCB also emphasised the utility of PIX in tax collection.
The long-term societal effects of these developments will be unclear in the near-future. It is clear that as the director of the BCB’s Financial System and Resolution Organisation, João Manoel Pinho de Mello, stated: “Instant payments will bring a major revolution in Brazil.”
FURTHER READING: Central banks to discuss digital currency development