Drex Coordinator Envisions Total Substitution Of Traditional Transaction Systems for Blockchain

While the current central bank digital currencies (CBDC) are commonly considered a complement to fiat currencies and conventional electronic money

The coordinator of Drex, the Brazilian CBDC pilot, believes that the technology behind it could eventually substitute the Reserve Transfer System (STR).

According to the Central Bank, the STR is considered the “backbone” of the Brazilian financial system, handling the settlements of monetary, foreign exchange, and capital markets, among institutions that manage accounts with the bank.

In an interview with Valor Economico, Fabio Araujo stated that all transactions could be made within this environment and that, as the technology advances, all business would be done within it.

However, Araujo acknowledged that this process should not be immediate, as the migration from one technology to another includes significant costs for the institution.

“I hope it takes time, because migrating the internet to blockchain is costly,” he stressed.

In 2023, STR settled the equivalent of the Brazilian gross domestic product (GDP) each 2.2 days.

While this migration would also highlight the need for new regulations to deal with the new system’s processes, Araujo recognized that at first, no regulation would be issued given that it would be a new technology applied to the existent environment.

At the same time, Araujo stated that this system would not have a direct connection with the real estate records, as the bank is not interested in taking over these operations. The Drex’s objectives would be to manage and ease financial settlements only.

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