Representatives from central banks, multilateral institutions and the private financial sector met yesterday (19) in São Paulo, during the MERGE São Paulo event , to discuss the advances and challenges of asset tokenization and digital money in the region.
The panel “Tokenization of Money: CBDCs, Tokenized Deposits and the Future of Digital Liquidity” brought together Bruno Grossi, head of digital assets at Inter ; Jaime Pradenas Baeza, head of the financial technology hub at the Central Bank of Chile; and Nayam Hanashiro, head of strategic projects and digital public goods at LNET.
The moderator was Luis De Magalhães, Latin America Team Lead at BeInCrypto.
The Central Problem: Fragmentation of Systems
For Bruno Grossi, the biggest challenge facing the current financial system is technological fragmentation.
According to him, the tokenization of money, a process that converts financial assets into digital tokens registered on a blockchain (a kind of decentralized digital ledger), can function as a technological “lingua franca,” allowing different systems to communicate.
Grossi’s proposal is that stablecoins (digital currencies pegged to a stable asset, such as the dollar) and tokenized central bank money operate with similar technology, which would improve the settlement and movement of funds between cities, countries, and banks.
The Chilean Regulator’s Perspective
Jaime Pradenas Baeza emphasized that innovation in payment methods is not new and that the current discussion represents another step in the historical evolution of money. For him, the central point is how to settle, that is, finalize and confirm, transactions with tokenized assets.
Pradenas Baeza explained that the Central Bank of Chile conducted a proof of concept (POC, a controlled practical test of an idea) to liquidate tokenized assets with central bank money in a wholesale environment, without necessarily issuing a public digital currency.
The executive also presented an IMF (International Monetary Fund) taxonomy that classifies the different ways of settling transactions in DLT (distributed ledger technology, the technical basis of blockchain): from platforms operated exclusively by the central bank to mixed models with the private sector.
“Money is trust, in the end,” Pradenas Baeza summarized.
The Drex Case: Strategic Advances and Retreats
Bruno Grossi detailed Drex, a project by the Central Bank of Brazil to create central bank digital money. The project went through two testing phases with 16 financial institutions.
During the tests, it was identified that the privacy solutions available for Ethereum (one of the main public blockchain networks) were not yet mature enough.
Given this, the Central Bank of Brazil opted to take a step back and develop a simpler use case, without blockchain for now, but maintaining the concept of digital currency to solve liquidity and asset transfer problems in the Brazilian financial system.
“Drex is an experiment to create a new financial system using new technologies,” Grossi summarized.
Regional Cooperation: 12 Central Banks on the Same Project
Nayam Hanashiro presented CB Web3, an IDB Lab initiative executed by LNET, a non-profit foundation created from the Inter-American Development Bank’s LACChain program.
The project brings together 12 central banks from Latin America and the Caribbean in a test network to issue, redeem, and test use cases for digital currencies, including cross-border settlement (payments and transfers between different countries).
The initiative also includes the participation of CEMLA (Center for Latin American Monetary Studies) and FLAR (Latin American Reserve Fund). All code and learning will be made available as a digital public good, open to the private sector and the community.
Pradenas Baeza confirmed that there is cooperation between the central banks of the region, including exchanges of experience with Brazil on lessons learned from Drex, although he did not formally confirm Chile’s participation in CB Web3.
The Debate that Can’t Wait
Finally, the panelists were asked what urgent question needs an answer in the next 12 months.
For Hanashiro, the central question is how to balance the pace of innovation in the private sector, with stablecoins and deposit tokens, with public institutional tracks, while preserving digital sovereignty and financial stability.
Pradenas Baeza highlighted the need to understand the coexistence between different forms of digital money and the risks and benefits of each.
Grossi pointed out that there is still much to be built technically, citing AMM (automated market maker) solutions as an example of a tool that still needs to mature to enable these systems.
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