This Monday (7), Brazil’s Central Bank officially announced the name of the country’s digital currency: Drex. Previously known as “Real Digital”, after Brazil’s official currency, Drex is expected to be released by the end of 2024.
According to Bacen, each letter of the name Drex highlights a different characteristic of the digital currency: D is for “digital”, R is for “Real”, E is for “electronic”, and X represents innovation and connectivity – and it is also the last letter in Pix, creating a synergy between Drex and the hugely successful instant payment method released in November 2020.
And the connections between the two releases don’t stop there: Brazil’s Central Bank aims to push Drex as “the Pix of financial services”, since the digital currency will enable the transfer of financial assets with the same instantaneity as Pix, aiming especially to boost new businesses and increase the access of small and medium Brazilian entrepreneurs to the digital economy.
How is Drex going to work?
Since Drex is not a new currency, but the digital version of Brazil’s official one, it will also be issued and distributed by the Central Bank, being available for citizens to use through financial institutions. The main difference between Drex and the regular Real is that the digital currency offers a wider range of innovative possibilities, supported by blockchain.
Since so much of Brazil’s money transactions already happen digitally, Drex’s goal is also to make business transactions more efficient, secure, and transparent – it will be possible to input rules and directives into Drex. The digital currency will be able to be used to sign smart contracts, which uses software to speed up and reduce bureaucracy in business.
Besides improving financial operations, the very existence of a digital currency opens up space for new business models, boosting the economy and cementing Brazil’s innovative payment landscape.
Throughout 2022, Brazil’s Central Bank studied potential use cases for Drex, and in March 2023, started doing pilot tests with the digital currency. This phase should last until the end of 2024, according to Bacen, after which Drex will be ready for public release.
A worldwide push for digital currencies
Drex is Bacen’s version of the so-called Central Bank Digital Currency, or just CBDC – around the world, around 90 other Central Banks are creating the digital versions of their respective countries’ official currencies. Therefore, besides reducing bureaucracy and increasing business opportunities for local entrepreneurs and citizens, the project also improves financial matters on a global scale.
Considering that Pix quickly became a world-renowned case for what an instant payment method can be, being massively adopted by the Brazilian population, Brazil’s Central Bank has with Drex another opportunity to put the country at the center of financial innovation.
For PagSeguro’s Head of Products Rafael Tomaz, the digital currency can be as revolutionary as Pix. “Our instant payment was a game-changer, and Drex can be another great success for Brazil’s financial system. The Central Bank is also implementing Open Finance, another major project – at PagSeguro, we are always closely following what’s happening in terms of payment innovation in Brazil, and also how the population responds to it, to be able to offer not only the proper features, but expert knowledge to our merchants.”
To know more about how to leverage Brazil’s innovative payment landscape in your business and how to reach the country’s consumers through Pix and other local payment methods, click below and get in touch with our expert team:
