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  • Writer's pictureDakila News

Drex and the Economic System: Transforming Currency in Brazil

In the world of finance and monetary policy, a new chapter is being written as Central Bank Digital Currencies (CBDCs) gain prominence. These are fully digital versions of traditional currencies, and more than 90 countries, including Brazil, have been diligently developing them over the past few years. According to the Atlantic Council, the number of central banks exploring these digital currency variants has surged from 35 to 130 in just a matter of years.


These currencies herald a discourse of transformation in the realm of monetary policy, aiming to enhance peer-to-peer transactions and negotiations.


On August 7th, the Central Bank of Brazil made a significant announcement, revealing the official name of its CBDC: Drex. This digital incarnation of the sovereign currency, the Brazilian Real, is already in the testing phase. Drex will be regulated by the Central Bank, adhering to the rules of the National Financial System (SFN) and the Brazilian monetary policy.

Logo do DREX - escrito DREX by Banco Central do Brasil

Drex will hold an equivalent value to physical banknotes, effectively becoming a form of currency that exists exclusively online. The Central Bank has confirmed that it can be exchanged for physical cash and vice versa. Access to Drex will be facilitated through virtual wallets provided by banks and other financial institutions. Just like traditional banknotes, Drex will not undergo automatic correction for inflation.


The initial testing phase is known as "Piloto RD" and is projected to continue until March 2024. This phase will evaluate the benefits of the Distributed Ledger Technology (DLT) platform for operations involving tokenized assets. It's important to note that this testing will take place in a simulated environment, involving no real transactions or monetary values.


*It's worth noting that while all blockchains are forms of DLT, not all DLTs are blockchains. Both concepts involve distributed databases within a network, promoting transparency and decentralization.*


In the case of Drex, the chosen platform is Hyperledger Besu, a blockchain modeled after Ethereum. However, Drex is not a cryptocurrency in the traditional sense; it will be fully regulated and controlled by the Central Bank. Cryptocurrencies, on the other hand, offer decentralized management, introducing more transparency to the platform.


During the Piloto RD phase, three categories of assets will be registered:

Drex Digital: For wholesale or interbank use; this represents the Central Bank's currency, analogous to bank reserves or settlement accounts.

Drex Tokenized: For retail use; these are tokenized versions of bank deposits, essentially representing the digital form of an individual's bank holdings.

Treasury Direct Bonds: Enabling the purchase and sale of federal government securities (TPF) in both the primary and secondary markets.


As of now, a precise launch date for Drex has not been established, but expectations point towards the end of 2024.


Despite the advent of CBDCs, the existing financial system continues to carry elements of oppression, perpetuating notions of scarcity and control. This is evident in the lack of financial education in schools, which raises questions about influencing society's investment behaviors and fostering prosperity.


It's vital to emphasize that understanding investment is not the same as speculation; it involves multiplying one's gains and sharing knowledge, rather than seeking excessive profits. The core proposition of Drex is to provide a secure and government-regulated space. The director of the Bank for International Settlements (BIS) highlights that CBDCs fundamentally differ by giving the central bank absolute control over rules and regulations governing its use, ensuring responsibility and technological integrity.


This development sparks discussions about the potential drawbacks of this technology. For instance, there are concerns about the prospect of certain activities and purchases being restricted based on social scores, a reality already seen in China. Contemplating worst-case scenarios, economists stress the importance of decentralized management, safeguarding citizen interests.


As a consequence, the cryptocurrency market has experienced significant growth in recent years, due to its decentralized nature. Unlike centralized systems, cryptocurrencies allow users to verify stored data without censorship. However, the high volatility and limited purchasing power of cryptocurrencies remain obstacles to widespread acceptance.


Enter the Bônus Dourado Mercantil Digital, commonly known as BDM Digital—the first virtual currency in Brazil, introduced by the Dakila Ecosystem in March 2020. Its value steadily appreciates based on market circulation. A distinguishing feature of this digital currency is its purchasing power. In several Brazilian states, particularly in Mato Grosso do Sul, and in numerous other countries, a robust network of businesses already accepts this currency. Even the Dubai Free Zone accepts BDM Digital.

Banner de propaganda do BDM - escrito BDM. O seu dinheiro digital. Instale o app, é rápido, fácil e sem custo. BDMERCANTIL.COM.BR.  @BDMERCANTIL

Although it's possible to invest and apply BDM Digital, it was not created for financial market speculation. According to Urandir Fernandes, president of the Dakila Ecosystem, strengthening one's prosperity with BDMs automatically bolsters the prosperity of all BDM holders. This contrasts with existing systems that enrich a few while impoverishing many. The aim here is to invert this prevailing logic.


In conclusion, the world of finance is undergoing a profound shift with the advent of digital currencies like Drex and BDM Digital. The road ahead promises innovation and transformation, but not without its challenges and ethical considerations.


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