Throughout history, the search for efficiency in exchanges and technological advances have transformed money. Once barter was overcome, humanity came to know commodity money, backed money and the most recent form: fiat money, which is backed by trust in its acceptance. More recently, technological advances have paved the way for digital fiat currencies, issued by central banks and known by the acronym CBDC (Central Bank Digital Currency).

There are a wide variety of CBDC models under discussion. O Bank of International Settlements (BIS) divides these initiatives into two categories: retail digital currencies (“retail CBDC”), to be used by consumers and companies in their daily transactions, and digital currencies for more restricted use (“wholesale CBDC”) aimed at financial institutions and central banks.

The concept of CBDC is essentially different from bank balances, which can be accessed via debit cards, for example. Technically, bank deposit balances are “book money” created by commercial banks and which necessarily depend on an intermediary financial institution. CBDCs, on the other hand, are issued directly by central banks using DLT (Distributed Ledger Technology). This technology works like an open ledger of records (e.g. transactions), without the need for an intermediary.

The new model promises more efficient transactions and greater financial inclusion. Under what conditions could these gains actually be observed? The International Monetary Fund (IMF) recently published an e-book which discusses issues related to central bank digital currencies. This article will focus on issues pertaining to financial inclusion, one of the flagships of credit bureaus.

The document summarizes CBDC's contribution to inclusion in three points. The first explores the properties of paper bills, which are more common among people without access to financial instruments. They are widely accepted, have low transaction costs and are used without the need for a bank account. These properties can, in theory, be replicated in a CBDC, attracting the financially excluded population.

Even without prior financial inclusion, CBDCs could act as a bridge to other financial services, paving the way for contracting credit, insurance and savings. This is the second point highlighted by the document. Central bank digital currencies can be designed to allow the sharing of transaction history and preserve data protection rights, facilitating access to the most sophisticated financial products.

The databases generated in these transactions would be added to existing databases, benefiting consumers in particular who have no history of dealing with the financial system. It is in this sense that the document places CBDCs as a gateway to other financial services.

The third point highlighted by the IMF brings together a set of complementary policies to make inclusion more effective. One of the barriers to financial inclusion is the lack of digital literacy. Therefore, among the complementary policies, the document mentions the creation of programs to expand financial literacy and the infrastructure needed to digitize communities. Education would work to increase confidence in the use of digital currencies and prevent fraud.

The points highlighted by the IMF are desirable properties from the point of view of financial inclusion, but their incorporation into each CBDC model is only a possibility. Many CBDC projects are in their infancy, which is why this discussion is so important.

In the Brazilian model, the use of digital currency in “retail” will depend on a banking intermediary. A DREX platform - as the digital real has been dubbed - will allow smart contracts to be programmed, ensuring that transfers of this currency are only completed when contractual conditions are met. This possibility does not exist with cryptocurrencies, and this differentiates the DREX platform from PIX.

The expected result is an expansion of the credit market and, above all, the capital market, where companies raise funds through more complex operations that can be streamlined using smart contracts. The integration of PIX, DREX and Open Finance forms the “Technological Agenda” of the Central Bank of Brazil , This also includes facilitating international payments in reais.

Brazil has a robust credit information system, as highlighted by the World Bank's international comparisons, which is constantly being developed by the bureaus. Increased access to the credit and capital markets will make it even more necessary to generate intelligence based on this information, which can guarantee effective inclusion without jeopardizing the stability of the financial system.

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