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Join WhatsApp channelFor a while now, Brazil has been actively working on the development of a Central Bank Digital Currency (CBDC). If everything proceeds as intended, the digital Real is expected to be introduced in 2024.
The digital currency will be backed by funds available in users’ bank accounts, ensuring a secure and reliable payment mechanism.
The introduction of the Brazilian CBDC will not disrupt or impede the existing payment methods widely used in Brazil, including Pix.
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The Brazilian government spokesperson emphasized that the decision to proceed with the CBDC project was driven by the aim to explore new opportunities for technological advancement. The digital Real has the potential to lower the costs associated with credit and other customer-centric financial products. This, in turn, would enable banks to expand their reach and serve a broader customer base.
“This could reduce the cost of credit, the cost of improving the return on investments. There is a great potential for new service providers, fintech, democratizing access to the market and offering new services.”
Unfortunately, the current iteration of the Brazilian CBDC contains some interesting code that could allow the government to directly interfere with users’ wallets.
Pedro Magalhães, a full-stack developer, shared his findings on LinkedIn after examining the source code of the digital Real.
According to Magalhães, the source code revealed intriguing functions that would grant the government the ability to freeze and unfreeze accounts, manipulate CBDC tokens within someone else’s account by creating, moving, or burning them, as well as initiate asset transfers on behalf of users.
While these functions could potentially be used to facilitate banks in providing loans and financial services to customers or aid in tracking financial crimes, they also open the door to more ominous possibilities.
