Brazil: Pix hinders success of payments with cryptocurrencies, says Central Bank advisor

RIO DE JANEIRO, BRAZIL – Bitcoin (BTC) has grown as a means of payment and has even been adopted as the official currency of El Salvador, but, in the assessment of the Brazilian Central Bank (BC), it should not have the same success in Brazil – at least not as a means of exchange.

According to Fábio Araújo, coordinator of the Central Bank’s work on digital currency, the use of cryptocurrencies for payments in the country has lost its purpose given Pix’s rapid penetration. In the first year of operation, 104.4 million people, or more than 60% of the population, made at least one transfer through the BC’s instant payment platform.

“It makes no sense to think of crypto to make payments in Brazil,” said Araújo at the Brazil Conference on April 10. “We have a very advanced payment system; the Pix was an adoption phenomenon.

The BC expert said that cryptos are an interesting solution for countries with payment problems, such as several in Latin America, especially when citizens have access to a stablecoin denominated in the local currency. However, the same would not be true for Brazil because “the Brazilian payment system is very modern.”

For the Central Bank, what attracts cryptocurrencies is the technology that allows creating innovative financial solutions with far fewer resources and in less time when compared to the traditional market.

“What we at the Central Bank see in the value crypto market is the programmability, the flexibility you have with these tools. A fintech can take these programming tools, make a new financial product, and put it on the market much faster than can be done today in the traditional market. It will bring more efficiency and contestability to the market,” Araújo pointed out.

Although he highlights the qualities of the Pix, the Central Bank coordinator says that the payment system is only a first step towards a broader inclusion of the population in the financial system. In light of this, the BC sees Open Banking and cryptocurrencies as a possibility to inaugurate the second phase of financial services expansion in the country.

“We have to provide options for investment, credit, and insurance. And this is what we see that crypto technology can offer to a market that is not yet covered today. That is the focus for Web3 and crypto technology in Brazil,” he said.

It is not the first time that the Central Bank’s digital currency work coordinator has praised the programmability qualities of cryptocurrencies. In May 2021, during a press conference to present the Real Digital project, Araújo said that the Digital Real should be born integrated with decentralized finance products (DeFi), compatible with smart contracts from the beginning.

With information from InfoMoney