Some time ago, we received news of the introduction of the yuan or digital renminbi, a currency issued by the Chinese central bank, including the presentation of an “innovative” map showing the transactions made with this currency. It was recently reported that some of the Chinese officials already receive their salary in e-RMB and that the Chinese authorities have distributed this coin to the population through lotteries.
E-RMB is the Chinese version of the Central Bank Digital Currency (CBDC), a digital currency issued by central banks which, while referring to well-known cryptocurrencies such as Bitcoin, differs in that it is issued by each country’s monetary authorities . Therefore, its issuance and circulation are monitored and inspected by government agencies, which is not the case with Bitcoin, Ethereum, Ripple and the like that are offered in the global financial market.
According to the news, China is not only adopting e-RMB, but is also thinking of creating an international payment system, such as the SWIFT system, which stands for the Society for Worldwide Interbank Financial Telecommunication, known to foreign exchange operators here in Brazil. . The idea of creating this new payment system is to reduce the risks of external interference in Chinese business and facilitate the internationalization of the Chinese currency.
New shape, same function
In fact, digital currencies created by central banks are just another way of issuing and putting into circulation a country’s currency. Here in Brazil, a working group was set up by the Central Bank to discuss the possible issuance of the digital real. It is believed that the issuance of a digital currency can improve the prevailing models for commercial and financial transactions between users, both nationally and internationally.
The studies being conducted here are also evaluating the scope and benefits of a digital currency adopted by Brazil and whether it could deliver benefits that complement the instant payment means like Pix, recently adopted by the Central Bank.
According to a consultation of the Central Bank, one of the objectives of the working group is to “propose a model for the eventual issuance of digital currencies, identifying risks including cybersecurity, data protection and normative and regulatory compliance, as well as the analysis of the impact of the CBDC on financial inclusion and stability and the conduct of monetary and economic policy ”.
Several countries are also exploring the possibility of launching their digital currencies such as the United Arab Emirates, South Korea and the United States. The approval of e-BRL by the Central Bank is a matter of time and certainly an adjustment to international financial trends.
Zilda Mendes, author of this article, is a professor at Universidade Presbiteriana Mackenzie working in the field of foreign trade and foreign exchange.