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The Stellar Development Foundation (SDF) and Mercado Bitcoin, Latin America’s largest cryptocurrency and digital asset marketplace, announced cooperation on May 24 to help develop Brazil’s CBDC.
“Minimum viable product”
As part of Brazil’s attempts to create a CBDC in 2022, Mercado Bitcoin and Stellar have teamed together to produce a minimum viable product.
The Laboratory of Financial and Technological Innovations of Brazil (LIFT), which was established to build a “minimum viable product (MVP),” will cooperate with Mercado Bitcoin on one of the nine initiatives pushed by LIFT, for a CBDC that meets the goals of the Brazilian government, according to an official post shared by the Stellar Foundation.
A “Minimal Viable Product” in this circumstance would be a CBDC solution that is functional enough to fulfill the Central Bank of Brazil’s minimum criteria, resulting in the best possible product with the least amount of effort.
The Mercado Bitcoin intends to satisfy the expectations of the Brazilian Central Bank.
Mercado Bitcoin CEO Reinaldo Rabelo stated that the business hopes to develop powerful solutions based on Stellar’s blockchain technology.
The Central Bank of Brazil (BC) and the National Federation of Central Bank Servers Associations backed the initiative (Fenasbac). Furthermore, all initiatives will focus on diverse use cases for the Central Bank of Brazil’s planned CBDC.
This should be sufficient to fulfill all of the criteria for the Brazilian CBDC’s review and potential approval.
Why develop CBDC
Stellar Development Foundation CEO Denelle Dixon stated that the organization is ready to investigate several use cases for the future Real Digital (the Brazilian CBDC).
As a result of this new cooperation, they will be able to assist Mercado Bitcoin in the creation of a blockchain product that has the potential to transform Brazil’s financial system.
The new CBDC will be dependent on the growth of significant financial and technological firms.
A number of well-known financial institutions compete with Mercado Bitcoin, including Visa, Microsoft, Aave, and ConsenSys.
Brazil is attempting to establish a CBDC based on the growth of significant financial and technical brands.
The CBDC might be deployed in the second half of 2022, according to Brazil’s Central Bank Governor, Roberto Campos Neto.
They will, however, launch a prototype version before becoming public, comparable to the CBDC in Europe.
He also said the CBDC will be priced using the STR (Reserves Transfer Method), which is “a system that liquidates all assets (in Brazilian Reals) and is guaranteed by the Real.”
He also indicated that banks will be allowed to produce stablecoins on their deposits utilizing the Central Bank’s CBDC platform, as well as allow smart contracts and DeFi solutions.
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With a background in journalism, Ritika Sharma has worked with many reputed media firms focusing on general news such as politics and crime. She joined The Coin Republic as a reporter for crypto, and found a great passion for cryptocurrency, Web3, NFTs and other digital assets. She spends a lot of time researching and delving deeper into these concepts around the clock, and is a strong advocate for women in STEM.
