Some time ago, we received news about the adoption of the yuan or digital renminbi, a currency issued by the Chinese central bank, including the presentation of an “innovative” card that shows the transactions made with this currency. Recently, it was reported that part of the Chinese civil servants already receive their salaries in e-RMB and that the Chinese authorities have been distributing this currency to the population, through raffles.
E-RMB is the Chinese version of the Central Bank Digital Currency (CBDC), a digital currency issued by central banks that, although referring us to well-known cryptocurrencies, such as Bitcoin, differs in that it is issued by the monetary authorities of each country. Therefore, its issuance and circulation are controlled and inspected by government agencies, which is not the case with Bitcoin, Ethereum, Ripple and similar ones 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, well known by foreign exchange operators here in Brazil. The idea of creating this new payment system aims to mitigate the risks of external interference in Chinese business and to 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 circulating a country’s currency. Here in Brazil, a working group was created by the Central Bank to discuss the possible issuance of the digital real. It is considered that the issuance of a digital currency may lead to the improvement of the models in force in commercial and financial transactions between users, both nationally and internationally.
The studies that are being done here also evaluate the scope and benefits of a digital currency adopted by Brazil and if they can bring benefits that complement the means of instant payments, such as Pix, recently adopted by the Central Bank.
According to a consultation with the Central Bank, among the objectives of the working group are “the proposal of a model for the eventual issuance of digital currency, with identification of risks, including cybersecurity, data protection and normative and regulatory compliance, as well as the analysis of the impacts of the CBDC on financial inclusion and stability and the conduct of monetary and economic policies “.
Several countries are also evaluating the possibility of launching their digital currencies, such as the United Arab Emirates, South Korea and the United States. The adoption of e-BRL by the Central Bank is a matter of time and certainly a need to adjust to international financial trends.
Zilda Mendes, author of this article, is a professor at Universidade Presbiteriana Mackenzie, working in the areas of foreign trade and foreign exchange.