Visa, the payments giant, has revealed a central bank digital currency (CBDC) project aimed at exploring new use cases for the Brazilian economy. The project aims to focus on small and medium-sized businesses in Brazil, particularly farmers who are in need of new financing options. Sky-high interest rates and bureaucratic bottlenecks currently plague funding options available to Brazilian farmers. Visa's solution allows farmers to create tokenized contracts on Ethereum to enable global investors to invest in local operations. This solution stands out from the rest of the pack as 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 assists with the Know Your Customer (KYC) requirements to comply with anti-money laundering regulations. Vanesa Meyer, Visa's head of Innovation and Design, said the company can help small and medium-sized businesses finance their operations in a simpler, more accessible, and secure way by introducing blockchain-based technologies, further democratizing equity financing, increasing market competition, and expanding financial inclusion.
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. Among the selected firms, 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 company's move into CBDCs has the potential to revolutionize the payments industry and financial services in Brazil. However, 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.
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