The Central Bank of Brazil has finally revealed the official name of its CBDC (Central Bank Digital Currency). It will be called DREX. The announcement was made on the institution’s Youtube channel in a video that featured digital real coordinator Fábio Araújo and the central bank’s deputy director of technology and information, Aristides Cavalcante.
Araújo explained what each letter in DREX stood for: D represents digital, while R, E, and X stand for real, electronic, and transaction, respectively. Araújo believes that DREX will be as successful as Pix, the platform that uses QR codes to allow Brazilians to conduct free and instant electronic money transfers. And instead of providing account numbers, Pix lets users use their emails and phone numbers.
Meanwhile, the Central Bank of Brazil says it will partner with private companies to mint its CBDC tokens and use distributed ledger technology to record the transactions. Brazilians can use DREX to buy public treasury bonds. They will also receive funds in the form of the CBDC when they sell those bonds.
Araújo is optimistic that DREX will positively impact the daily lives of all Brazilians. He expects the CBDC to offer the unbanked easy access to financial services.
Practical Use Cases of DREX
Several prominent people in Brazil have publicly proposed the use cases of DREX since the Central Bank of Brazil disclosed its CBDC plans a few months ago. For instance, Maria Rita Serrano, the President of Brazil’s biggest public bank, Caixa Econômica Federal, said in June that DREX could be used to pay labor and social benefits in the future.
In July, Senator Carlos Portinho tweeted that the CBDC could open possibilities for state entities and municipalities to maintain crypto wallets, a move that would attract investors.
DREX Controversy
Last month, the Central Bank of Brazil published the DREX system code on GitHub, allowing developers to audit it. They discovered worrying functionality in the digital real smart contract. As per the code, the central bank has the power to freeze user accounts.
Brazil-based crypto news house Portal do Bitcoin recently sought the court’s clarification in regard to the matter. The media company was told that the functionality was necessary to ensure DREX was compatible with existing legislation.
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