Drex will bring more speed, convenience and lower cost to several contractual and financial transactions that Brazilians make today. Below, we gather more information about the arrival of Drex, which will make life easier for the citizen.
With a new look and name, the Central Bank Digital Currency (CBDC) project, being created by the Central Bank of Brazil, is now called Drex. The solution, previously referred to as Real Digital, will provide citizens and entrepreneurs with a safe and regulated environment for the generation of new businesses and more democratic access to the benefits of digitizing the economy.
What is Drex and how will it impact the daily lives of Brazilians?
Drex is a new representation of the real, our everyday money. This new representation will be made on a platform with technologies that allow the provision of financial services in an efficient and democratic way. Thus, the potential to affect the daily life of Brazilians is very large, in the same way that Pix democratized access to payment services, Drex is being developed to democratize access to financial services, such as credit, investment and insurance. "Drex will bring more speed, practicality and lower cost to several contractual and financial transactions that we do today", explains Maurício Moura, director of relationship, citizenship and supervision of conduct at the Central Bank.
How will a transaction with Drex work?
Citing the purchase and sale of a car, for example, there is often a fear of the seller passing the ownership of the vehicle without receiving the money first and the buyer paying before having the property. "With Drex's programmability function, it doesn't matter who makes the first move, as the contract will only be completed when both things happen. So money and property are transferred simultaneously. If one of the parties fails, the amount paid and the car return to their respective owners", exemplifies the director. "Drex will bring more speed, convenience and lower cost to several contractual and financial transactions that we do today", adds Maurício. Drex can also be used to purchase real estate. In addition, in the future, social benefits can be paid with the digital currency.
What are smart contracts and how will Drex enable them?
Distributed Ledger Technology (DLT), similar to blockchain, allow the automation of financial transactions using smart contracts, which are nothing more than programs that run securely on DLT networks. The current Drex testing phase is being developed on Hyperledger Besu, which is a DLT that incorporates smart contracts. Thus, programmability through smart contracts is a fundamental part of the Drex platform.
Why did the Central Bank wait to announce the new name and not announce it together with Real Digital Pilot, launched earlier?
Since the beginning of the discussions regarding the Brazilian central bank digital currency, now called Drex, the Central Bank's Board of Directors considered it important to give the initiative a specific name in order to simplify communication – as happened in most countries. The Drex brand development process began in 2022, when the main aspects of the Brazilian CBDC model had already become clearer. The purpose of this development was to standardize communication regarding the Brazilian central bank's digital currency initiative, allowing all communication to focus on the use of a single brand. This standardization avoids the need to use technical terms in communication with the general public - such as digital real, tokenized real, smart settlement platform or smart contracts - commonly used in the technical communication of the initiative, but which make it difficult for most part to understand of the population.
Was there always the intention to name the project Brazilian CBDC? Did you use Pix as an example?
The Drex brand ideation process followed the Pix brand development process. According to director Maurício, a good brand "helps with recognition and familiarity with the product". In the Drex brand, finally developed by Central Bank, the combination of letters forms a word with a strong and modern sound: "d" and "r" allude to Real Digital; the "e" stands for electronic and the "x" conveys the idea of modernity and connection, the use of distributed ledger technology (DLT), technology adopted for Drex, continuing Central Bank's family of solutions started with Pix. In addition, Drex's visual concept, which fits into the context of the Central Bank's modernization agenda, is based on the use of typography and graphic elements that refer to the digital universe. Alluding to a transaction, the two arrows that are included in the "d" are related to the evolution of Real to the digital environment, reinforcing the attribute of agility, and the use of colors, in a transition from blue to light green, becomes "transaction completed" message.
Should Drex become popular like the Pix, for example?
Pix is an undisputed success and hard to match, but Central Bank intends to use the lessons learned from Pix to make Drex a very popular platform that can be part of people's daily lives. "Since its launch, Pix was soon incorporated as a buzzword in everyday life. Today we all talk 'make a Pix'. Soon, we will also talk 'use Drex'", predicts the director.
Is the Central Bank going to adopt Drex for all its communication from now on?
Yes. Drex is the official name of the Brazilian digital currency and will be adopted in all Central Bank communication regarding it.
Will Drex cost the user? How will this charge be made?
Any cost associated with Drex will be related to the financial service provided by the offering institution. It will be up to the institution to define the cost for the service offered, following the regulation and considering the competitive environment, and it may even be free or significantly lower than the cost of a similar service prior to the adoption of Drex.
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