Central Bank of Brazil to Test Security and Transaction Privacy Levels of the Digital Real

The Central Bank of Brazil will focus its first digital real-world tests on determining the levels of privacy and security that can be achieved with the proposed Central Bank Digital Currency (CBDC) infrastructure. Tests will be conducted later this year and will allow a simplified transaction to be set up for transactions with a tokenized asset that has yet to be defined.

Brazil’s central bank to launch Digital Real test operation later this year

The Central Bank of Brazil is accelerating the implementation of the digital real project, approaching the pilot testing phase. The institution announced that it would conduct a series of operational tests to verify the functionality of the proposed system architecture.

Fabio Araujo, Digital Real project coordinator at the Central Bank of Brazil, explained that security and privacy will be the two most important areas to be explored in these tests. Araujo said Broadcast:

We are going to simplify the operation, but we will have information exchanged between several participants to see the degree of security and privacy that we can provide for the system. TThe pilot is focused on this.

Araujo explained that the purpose of this test would be to determine if the leaked transaction information received from the system is compatible with current regulatory requirements.

Test details

The tests described by Araujo will begin after the current digital reality laboratory phase, which is currently being carried out as part of the LIFT open project, which brings together various organizations. The challenge has attracted nine different proposals aimed at incorporating digital reality into economic activity.

Institutions and organizations participating in the LIFT competition must submit their final project reports on 25 April. It is expected that a new set of pilot tests will be carried out after this event. However, the pilot project will be limited in scope, shown in a simplified operating environment, and will only involve the introduction of another, not yet selected, tokenized asset for transactions.

The test will also allow the Central Bank of Brazil and the Brazilian Securities Commission to explore how third parties can interact with the system, including banks that can issue their own digital real-backed tokens. This expanded test environment will be open to institutions and banks in 2024.

While there is still no announced launch date for the digital real, Roberto Campos Neto, President of Brazil’s Central Bank, has hinted at a 2024 release date in December.

What do you think of the announced focus of digital real tests? Tell us in the comments section below.

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