On March 3, 2022, Brazil’s central bank announced that it has chosen nine proposals to forward in its effort to create a central bank digital currency (CBDC). The Lift Challenge Real Digital chose 9 initiatives for supervision, accounting for roughly 20% of the 47 applications filed by 43 various firms.
The ecumenical interest in the topic drew companies from Brazil and seven other countries to participate (Germany, United States, Israel, Mexico, Portugal, United Kingdom, and Sweden).
The evaluation process sought a compromise between the range of the portfolio of proposals provided to the laboratory and the necessity for comprehensive monitoring of the chosen projects, given the large number of initiatives of significance and interest for the growth of the Real Digital initiative.
The Real Digital application projects were the most diverse, covering the entire universe proposed in the call for papers, including delivery versus payment (DvP), payment versus payment (PvP), internet of things (IoT), DeFi applications, and payment solutions when both the payer and the receiver do not have access to the internet (dual offline).
The initiatives will be progressed through a bank-managed innovation lab. The lab, which goes by the name LIFT in Portuguese, chose initiatives from banking institutions, a Decentralized Finance (DeFi) protocol, and a major crypto exchange. The goal of this exercise is to investigate potential applications for a digital Brazilian real, as well as the technological viability of several approaches to reaching there.
List of projects selected by Brazil’s Central Bank
LIFT has agreed to develop the following initiatives with the goal of establishing the digital real, according to the information given by Brazil’s central bank:
- Aave-gathers resources from several savers (forming a liquidity pool) with a focus on offering loans and guaranteeing the adherence of these operations to the rules of the financial system, using DeFi tools
- Banco Santander Brasil-deals with DvP and the conversion of the right to own vehicles and properties to a digital format (tokenization).
- Febraban-deals with DvP of financial assets
- Giesecke+Devrient-handles dual offline payments
- Itau Unibanco-In an application with Colombia, handles international payments using the PvP approach.
- Bitcoin Market-focuses on DvP for digital assets, with an emphasis on crypto assets
- Tecban-presents logistics solution for e-commerce based on IoT technologies
- VERT-deals with rural financing using a programmable tokenized asset with a value tied to the real estate market (Real stablecoin)
- Visa do Brasil-deals with DeFi-based finance for small and medium-sized businesses
The digital real challenge is one of LIFT’s 11 projects for 2021. The others are about open banking, simplifying digital payments, customer empowerment, and paying taxes using a digital wallet, among other things.