Brazil's Journey in Digital Financial Innovation: Insights from Pix and Drex

Brazil's Central Bank has taken a prominent role in reimagining the future of financial systems by leveraging digital innovation, as highlighted in recent remarks at the Digital Money Summit 2025. The Brazilian experience with Pix, an instant payments platform, and Drex, a pilot central bank digital currency (CBDC) project, offers important lessons for other economies navigating similar transformations.

Pix, launched in 2020, rapidly transformed Brazil’s payments landscape by offering instant, low-cost and highly secure transactions across broad user groups. Its open, inclusive architecture not only facilitated access to underserved populations but also showcased how public digital infrastructure can level the competitive playing field and spur financial inclusion. The Central Bank envisions Pix evolving into a foundational infrastructure that might one day support more complex innovations—such as the settlement of tokenized assets.

Drawing on Pix's success, the Bank initiated the Drex project to trial a programmable multi-asset CBDC built on distributed ledger technology. Drex’s pilot phases have focused intensely on technological challenges, particularly striking a balance between transaction privacy, scalability, and ease of programmable transactions—a dilemma often termed the "privacy trilemma." Advanced privacy tools were evaluated, but each involved trade-offs, frequently limiting speed and user experience, highlighting how privacy, performance, and flexibility remain difficult to reconcile on current technology platforms.

Phase two of the Drex pilot examines real-world business models and seeks improvements for market efficiency, especially for small and medium-sized enterprises. Tokenization and smart contracts are being tested for use cases like secondary markets for time deposits and credit assets, aiming to lower costs, streamline settlements, and open new collateral options. These efforts support a pragmatic, phased innovation strategy: Rather than a wholesale leap to CBDCs, Brazil is incrementally improving settlement systems while remaining ready to integrate advanced ledger technology when practical barriers recede.

Looking ahead, the Central Bank foresees an increasingly tokenized ecosystem—potentially including tokenized central bank money—where cross-jurisdictional cooperation and collaborative experimentation set the stage for market democratization and greater financial efficiency. The Brazilian approach prioritizes flexibility, collaboration, and inclusivity, using technological advancements to address real-world market frictions rather than pursuing innovation for its own sake.

Brazil’s experience with Pix and Drex underlines the importance of balancing visionary ambition with risk management and market engagement, offering a roadmap for others eager to harness technology to build more efficient, secure, and inclusive financial systems.