Drex may have transaction fees, the Central Bank confirms

While some Brazilians speculate whether the arrival of Drex will mean the end of the Brazilian Real, others are more concerned about the demands the environment will place on the population.

Digital currency in CBDC format, formerly called Digital Real, Drex should arrive at the end of 2024. The Central Bank of Brazil’s plans include using a DLT, a centralized distributed data system, which simulates a blockchain but in a highly controlled environment.

In public meetings ahead of Drex’s presentation, Bacen has already made it clear that access to the environment will be the responsibility of banks and other regulated institutions. That is, if these companies decide to charge users for the services they offer, the central bank will not intervene.

“The final cost of access to Drex will be related to the services provided,” said Brazil’s Central Bank

Following the successful implementation of Pix by the Central Bank of Brazil, Drex is emerging as the regulator’s latest response to the growth of Bitcoin in the country, a decentralized digital currency that has fallen in love with the populace.

For example, Drex brings implementations of smart contracts and other Web3 technologies, trying to simulate the characteristics of cryptocurrencies, mainly Ethereum, whose technology will be indirectly present in the Brazilian national currency, supporting Ethereum Virtual Machine (EVM) applications .

But on August 11, 2023, the Central Bank of Brazil clarified a pertinent doubt for Brazilians, which brings the cost of Drex to the end user. In response to this, the municipality states that financial institutions will determine whether or not the costs of the new environment will be free.

“All costs associated with Drex are related to the financial service provided by the offering institution. It is up to the institution to determine the cost of the service offered, according to regulations and taking into account the competitive environment, and it may even be free or substantially less than the cost of a comparable service prior to Drex’s adoption.

It is worth remembering that, for example, there is still no table of operational costs, since the environment is in the pilot test version.

“Drex will bring more speed, convenience and lower costs to many of the contractual and financial transactions we do today“, explains Maurício Moura, director of relations, citizenship and conduct supervision at the Central Bank.

Drex intends to facilitate the purchase and sale of real estate and vehicles in Brazil

Referring to the purchase and sale of a car, there is often a fear that the seller will transfer ownership of the vehicle without first receiving the money and that the buyer will pay before owning the property. According to director Maurício, smart contracts from Drex will facilitate negotiations.

“With Drex’s programming capability, it doesn’t matter who makes the first move, as the contract isn’t completed until both things happen. Thus, money and property are transferred at the same time. If one of the parties fails, the amount paid and the car will go back to their respective owners.”

Drex can also be used to buy real estate. In addition, social benefits can be paid in the future with the digital currency, such as Bolsa Família.

Just as the Brazilian Real is legal tender and Pix is ​​a system that has to be implemented by banks, it is expected that with the arrival of Drex, institutions will immediately start using the centralized environment.

Suspicious transactions involving money laundering and terrorist financing, among other things, should be flagged for investigation in Brazil’s new financial system. Cash must eventually be phased out in Brazil.

Can the Brazilian real put an end to the arrival of Drex?

It is not clear whether the Brazilian real name is nearing its end with the arrival of Drex. In official statements, the Central Bank of Brazil has not commented on the “end of the Real” scenario, nor made any mention of it.

In Brazilian history since the 1980s, the longest lasting currency is the Real, created on 7/1/1994 and about to turn 30 in 2024. Coincidentally, this is the year the Drex arrives.

For the Real, the Royal Cruise (CR$) (from 8/1/1993 to 6/30/1994), Cruise (Cr$) (from 16/03/1990 to 31/07/1993), Cruzado Novo (NCz$) effective from 1/16/1989 to 3/15/1990, Cruzado (Cz$) in effect from 28-02-1986 to 15-01-1989, Cruise (Cr$) in effect from 5/15/1970 to 2/27/1986 were Brazilian currencies.