The plan outlined so far by the president of the Central Bank, Roberto Campos Neto, for the digital real tends to be the best possible to preserve the role of banks in the financial system and, at the same time, guarantee the digitization of money using blockchain technology. This is the opinion of Denelle Dixon, CEO of the Stellar Development Foundation.
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SDF is the organization that manages the Stellar Network (XLM), a blockchain that was born as a quick and cheap alternative to Bitcoin (BTC), but ended up winning the favor of governments that are studying the possibility of launching digital currencies. of central banks (CBDCs) – such as the Brazilian one.
Sought by the Ukrainian government to compose an ambitious effort to digitize the economy that ended up being frustrated by the Russian invasion, the platform gained the possibility of playing a central role in the construction of the digital real by being contracted by Bitcoin Market, CPQD Foundation and Bitrust, which form a of the nine consortia of the pilot project created by the Central Bank to find the ideal model for the Brazilian digital currency.
In the conversation, Dixon, who holds a PhD in Law from the University of California and former director of operations at Mozilla, praised the Brazilian initiative, explained why it has the potential to reconcile innovation with the survival of banks, and even nudged the US, stating that the model would be the most recommendable for the digital dollar. Check out the interview:
InfoMoney CoinDesk – Stellar did not start out as an infrastructure service for CBDCs. Why has this changed?
Denelle Dixon – This is the best thing about Stellar. It’s always been awesome for CBDCs, but it’s never been the focus of the different countries that focus on it. The good thing about Stellar is that it allows you to issue assets very easily. The asset issuance function makes CBDCs, stablecoins, gold-backed assets very easy to issue, literally a line of code.
On the CBDCs side, something valuable is Stellar’s integration with compliance measures. So if you are going to issue a CBDC, Stellar is kind of the ideal platform, because you can choose between permissioned creation – requiring identity verification before sending to someone – or non-permissioned – where any user can buy the asset anywhere.
So Stellar has always been ideal for CBDCs, but only now are countries looking to it as an alternative.
InfoMoney CoinDesk – Do you think CBDCs are inevitable for all countries?
Denelle Dixon – I don’t think it’s inevitable for all countries. I think some countries will find CBDCs to be a very useful tool for them. We have just entered the stage where CBDCs offer asset usage in a simplified way.
You can issue it at home and have the currency leveraged abroad, but you know what’s happening to it because you’re tracking it through an immutable record. That’s the value of blockchain. I think a lot of countries are going to look at this because they’re going to find it very valuable if they want to digitize money fully.
President Zelensky of Ukraine, for example. When we met with him, he said he wanted to have a cashless society by the end of this year – that was before the war. But there are also a lot of other countries that are looking for digital money because it is easier to store, the blockchain is an immutable record and allows everyone to see what is happening, there is no fraud and money laundering on the blockchain. And that has a lot of value.
Some countries will consider this inevitable and will seek to have [uma CBDC] as an infrastructure layer. But probably not all countries.
InfoMoney CoinDesk – The president of the Central Bank of Brazil said recently that he sees the digital real as a basis for banks to issue their stablecoins in reais. What is your opinion about this?
Denelle Dixon – I think it’s amazing. If you think of correspondent banking as they exist in the US today, the Fed issues the dollars and the banks are guaranteed by the federal government while they do the work of getting the money to consumers. The Fed does not establish the relationship with the consumer. That’s a good thing, and I think a CBDC can do the same.
The body that issues the CBDC at the governmental layer does not need to maintain the relationship with the consumers, so the banks can have this relationship, using their stable assets guaranteed by the CBDC. I think it’s a smart way to do it. Unless you want the central bank to have that relationship with the consumer.
Sometimes people may not want that kind of relationship because they don’t want the federal government to know everything about them. Then [a proposta do BCB] it’s interesting.
InfoMoney CoinDesk – And so the CBDC doesn’t end up with the banks either, right?
Denelle Dixon – Exactly, this is also an important point. We are already seeing dollar-backed stablecoins in the US, and institutions that are not regulated like banks issuing stablecoins in an auditable and traceable manner. We love that it creates competition and innovation, including outside the US, and having that kind of infrastructure is good for the consumer.
But I don’t want the banks to go away. So the possibility of issuing CBDC-backed stablecoins is a great alternative. And you can do that at Stellar, asset issuance is our backbone.
InfoMoney CoinDesk – Have you seen similar proposals from other central banks around the world that Stellar talks to?
Denelle Dixon – Actually, I’ve seen several who are thinking of similar paths. One of the things we often say is that if the US ever had a CBDC – which I don’t necessarily believe in because there are so many strong stablecoins – that would be the model we would recommend. [ao Fed].
InfoMoney CoinDesk – Is Stellar being sought after for more CBDC projects?
Denelle Dixon – There are other institutions that work with us in sandbox environments, and we help them to work in the network and create value. So we have groups all over the world that are focusing on Stellar to support their CBDC pilots.