Payments giant Visa has unveiled a new central bank digital currency (CBDC) project, aimed at exploring new use cases for the Brazilian economy. The project will focus on small and medium-sized businesses in Brazil, particularly farmers who are in need of new financing options. Currently, funding options available to Brazilian farmers are plagued by sky-high interest rates and bureaucratic bottlenecks that negatively impact their operations. Visa's new solution will enable farmers to create tokenized contracts on Ethereum, allowing global investors to invest in local operations. This solution stands out from the rest of the pack because it uses Visa's proprietary technology called Universal Payment Channel (UPC) to enable interoperability among various forms of digital assets.
Visa's partnership with Microsoft will assist in complying with anti-money laundering regulations and Know Your Customer (KYC) requirements. By introducing blockchain-based technologies, the company aims to help small and medium-sized businesses finance their operations in a simpler, more accessible, and secure way, according to Vanesa Meyer, Visa's head of Innovation and Design.
The Brazilian central bank selected Visa and eight other companies to explore real-world use cases for the digital real from a pool of over 40 companies that indicated an interest in 2022. Aave, a DeFi platform, was selected to explore peer-to-peer loans, while Banco Santander Brasil and Itau Unibanco were chosen to research the tokenization of real-world property and international payments, respectively. However, it remains unclear when the central bank will launch the digital real. In March, the CBDC made its debut on a publicly distributed ledger to gauge interest.
Visa's CBDC project aims to help small and medium-sized enterprises in Brazil gain access to global funding and improve their operational processes. The success of the project will depend on the central bank's willingness to launch the digital real and whether farmers and other small and medium-sized businesses are willing to use the new solution. Visa's move into CBDCs has the potential to revolutionize the payments industry and financial services in Brazil.
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