Brazil’s new central bank digital currency will be called ‘Drex’

The Central Bank (BC) of Brazil announced on Monday (August 7, 2023) that the name of the new digital currency (CBDC) will be “Drex.”

According to the monetary authority, the “d” and “r” refer to the digital real, the “e” stands for “electronic,” and the “x” aims to convey a sense of modernity and connection.

There was already an expectation that this new technology would be an advancement from Pix, the BC’s instant payment system.

Drex is a Central Bank Digital Currency (CBDC). Unlike cryptocurrencies, a CBDC is backed by the government and has centralized issuance.

Thus, Drex is a digital extension of the physical real currency.

Its value remains consistent: one Drex is always equivalent to one paper or coin real. Drex can also be exchanged for paper notes and vice versa.

To access this digital currency, users need a virtual wallet, which will be held by a payment institution or a bank authorized by the Central Bank.

The Central Bank will use a distributed ledger platform, like blockchain, for transactions.

There will be three types of assets:

• Digital Real for wholesale and interbank markets, similar to bank reserves or settlement accounts.
• Tokenized Real aimed at retail, analogous to a bank deposit.
• Direct Treasury Titles, which can also be bought and sold in this environment.

As for its release, Drex is currently in a pilot testing phase involving 16 individual companies or consortia.

The Central Bank’s discussions to create a digital currency started in 2020.

While there’s no official release schedule, it is anticipated that Drex will be available to the public by the end of 2024.

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