The central bank of Brazil sets up a working group to study digital currencies.

Brazil’s central bank said online payments have been growing in recent years, and a digital currency would allow Brazilians to interact with their money entirely online. The central bank has set up a working group to study digital currencies. A digital real would also help cut costs of issuing and maintaining banknotes and coins, said Brazil’s central bank. The estimated cost of handling paper money in Brazil is around 90 billion reals ($16 billion) per year, said the central bank, adding that it is usually between 1% and 2% of countries’ gross domestic product or GDP.

The central bank has not decided to issue a CBDC.

Though Brazil’s central bank would study the impact of “eventual” issuance of digital currency, it may not issue one. “It is important to note that the group’s approval does not mean that the central bank will issue a digital currency,” said Rafael Sarres de Almeida, an official of the central bank. The central bank official noted that the study would mainly help the central bank to “give society a response on the topic.” The working group will also assess how digital currency can bring complementary benefits to Brazil’s upcoming instant payment system, called Pix, in November.

Central banks across countries explore CBDCs.

The Bank for International Settlements’ new working paper analyzes the global state of CBDC research and development work, technical approaches, and policy stances. The report notes that the interest of central banks in CBDCs has increased by a lot this year. China is all set to become the world’s first major nation to issue its central bank-backed digital currency dubbed DCEP. The People’s Bank of China has been working on the centralized digital currency for the last five to six years and is now very close to issuing it to the general public. Central banks of England, Japan, Philippines, USA, Canada, and several other countries are exploring the idea of issuing CBCDs.