Setback for Brazil’s Central Bank Digital Currency Pilot
Recent reports from Brazilian media indicate a significant setback for the country’s central bank digital currency (CBDC) pilot known as drex, as major companies like Microsoft and EY have scaled back their involvement in developing related privacy solutions. This shift comes in the wake of the Central Bank of Brazil’s decision not to endorse any projects during the second phase of the drex pilot, leading to a decrease in resources allocated for advancing the initiative.
Challenges in Privacy Solutions
Particularly troubling for the drex project is the inability of proposed privacy solutions to meet the stringent criteria set by the central bank for transaction confidentiality while still allowing for regulatory oversight. According to Valor Economico, EY has had to let go of three team members from its Starlight privacy initiative, while Microsoft has reduced its resources for the ZKP Nova privacy proposal, even after a significant investment last year in the solution. However, Microsoft’s partner, Hamsa, will continue to test and provide support for ZKP Nova.
Future of the drex Project
The central bank’s hesitance to approve any privacy solutions presented during the second phase has raised questions about the future of drex. Executive Secretary Rogerio Lucca mentioned that the drex development team is evaluating the project’s next steps based on ongoing test results, although specifics about these tests have not been disclosed.
Conclusions
The lack of clarity and support from the central bank, coupled with the withdrawal of involvement from key corporate players, has created a challenging environment for the advancement of Brazil’s drex digital currency pilot. Reflecting on these developments, the central bank has not issued any recent statements regarding the path forward for drex, signaling a potential impasse in the initiative’s progress.
