Brazil’s Central Bank and the National Federation of Associations of Central Bank Servers (FENASBAC) have chosen nine projects to evaluate and assist their various suggestions for implementing a potential central bank digital currency (CBDC) for the country. The financial institution has mandated these projects to simulate what it would be like to have an electronic currency in Brazil.
The companies whose projects were selected for the simulation include Mercado Bitcoin, Banco Santander, and Aave.
The LIFT Challenge Has Chosen Nine Digital Currency Initiatives
The LIFT competition, coordinated by Fenasbac and Brazil’s Central Bank, has chosen nine projects. These projects have various ideas on how a digital currency can be incorporated into multiple sectors of the Brazilian economy and what the citizens can use it to buy. LIFT ( Laboratory of Financial and Technological Innovations) chose these nine initiatives as the most intriguing among 47 proposals submitted by 43 different organizations.
Companies worldwide responded to the challenge, including suggestions from firms in Israel, Germany, the United Kingdom, the United States, Portugal, Mexico, and Sweden. The central bank made the following statement about the parameters that will be used to pick some projects and discard others:
“Our central bank attempted to strike a compromise between the diverse proposals submitted to the laboratory and the necessity for comprehensive monitoring of the selected initiatives.”
Diversification Of Projects Selected
The nine accepted projects are incredibly diverse from each other. They all strive to incorporate digital currency into various applications such as delivery vs. payment systems, defi applications, payment vs. payment services, the Internet of Things (IoT), and dual traditional payment ideas.
Tecban, Aave, Febraban, Banco Santander Brazil, Giesecke + Devrient, Bitcoin Market, VERT, Ita Unibanco, and Visa do Brazil presented the nine selected options. For example, Giesecke + Devrient’s approach tries to leverage digital currency as a mechanism to tackle the problem of offline payments.
Aave, the defi protocol, also outlined a proposal that would concentrate on lending opportunities while maintaining compliance with the laws of the financial system. This loan option will be made available through the use of defi technologies such as liquidity pools. The project of Itau’s Unibanco will focus on leveraging the digital currency for making international payments and creating an app for Colombian citizens. Visa do Brasil’s application would use the token to finance SMEs using a defi application.
According to the press release, the Central Bank intends to research all of these applications to gain a better knowledge of the usage of a virtual currency and eventually produce its own virtual money. It is not yet sure when the country will release its electronic currency as the evaluation process would have to be completed first.