The Central Bank of Brazil (BCB) last week announced the name of the new digital currency that will enter into force in 2024: the Drex. With the aim of facilitating transactions and making financial operations more secure, Drex presents an innovative approach to handling the virtual finances of Brazilian citizens.
Drex, also known as Real Digital, will operate as a virtual version of banknotes in paper money, being a digital representation of banknotes issued by the BCB.
Its implementation should represent a major advance in the regulation of the digital economy in the country, as emphasized by economist Eduardo Amendola, in a note to live coins.
Economist says users can “run Pix in Drex”, you see
The expert points out that the rules and foundations that support the stability of the Real will be preserved and explains how it will work in practice.
“The new digital currency follows the same policies and regulations that guarantee the value and stability of the conventional currency, including the quote against other currencies, which will be the same as today’s real ones. Through the platform created for Drex to circulate, it becomes possible to carry out financial transactions, transfers and payments. Unlike PIX, a value transfer mechanism, Drex is the currency itself. The user can even create a Pix in Drex, or use Drex to make transfers and payments in other existing ways. Income can be expressed in Reais (R$), Dollars (US$) or DREX (DR$)“says the teacher at Estácio.
The Central Bank plans to migrate several financial services to the Drex platform, bringing greater security and simplicity through digital wallets and automated contracts. This will result in, among other things, reducing costs associated with bureaucracy, eliminating middlemen and streamlining payment processes.
Drex is not a cryptocurrency but a CBDC
Amendola explains that Drex shares technological developments resulting from the development of cryptocurrencies – which are issued in a decentralized and illicit way in Brazil – but emphasizes that Drex is not a cryptocurrency.
The Drex is only issued by financial institutions with escrow and if there is a parity between the digital and physical money i.e. the Drex is not issued if there is not enough physical money held as a reserve.
“While cryptocurrencies are assets characterized by value-attitude determined by the market and the absence of regulation, Drex is the currency itself, whose value is guaranteed by the Central Bank of Brazil“, informs the economist and professor at Estácio.
Source: Live Coins
Barry Siefert is an accomplished journalist and author at The Nation View. He is known for his expertise in the field of cryptocurrency, and has written extensively on the topic. With a background in finance and economics, Barry has a deep understanding of the underlying technology and market forces that drive the crypto industry.
