Allan Augusto Gallo Antonio, professor of Economics and Law at Mackenzie Presbyterian University (UPM) and Researcher at the Mackenzie Center for Economic Freedom (CMLE)
Jhonathan Augusto Gallo Antonio, lawyer and master's student in Economics and Markets at Mackenzie Presbyterian University (UPM)
THE DREX, the new and first digital currency of Brazil, will be launched soon and has been presented as a promising innovation for the national financial system, but not all the anticipated impacts are necessarily beneficial for the population. Although the official speech points out only advantages, as greater efficiency and reduction of transaction costs, the DREX can also generate consequences that negatively affect part of the citizens, especially in terms of privacy and digital exclusion
A strongly used argument for the respective defense of the use of DREX in national territory is the reduction of transaction costs, what, according to transaction cost theory, can increase the efficiency of economic exchanges
It happens that, in the Brazilian context, this efficiency is not guaranteed, given that a significant percentage of the population does not have easy access to digital devices and the internet. Thus, the potential technological imposition that will be brought by Brazil's first digital currency can, by increasing the population's dependence on technologies that are not accessible to everyone, corroborate for an intensification of social inequalities, mainly regarding the poorer and peripheral regions
There is still another aspect that causes concern: privacy. DREX will be based on blockchain technology, this, in simple terms, it means that there will be traceability and transparency in all transactions, which raises serious concerns about the protection of personal data
In this line, in accordance with the theory of externalities, while this technology will be beneficial to the government in combating fraud and financial crimes, the constant tracking of transactions may expose personal information and sensitive data of individuals, creating an atmosphere of continuous and permanent surveillance. From this, one can raise the following ethical question: to what extent would the Brazilian population be willing to give up their privacy in exchange for a supposed greater efficiency in the financial system
Finally, from the perspective of monetary policy, DREX has the potential to give BACEN even greater control over the money supply and the resulting inflation. Even though many believe that this type of intervention can, somehow, be positive in economic terms, the truth is that this potential tighter control may end up resulting in greater state interference in people's financial lives and make the monetary system more susceptible to possible manipulations and political pressures. All this centralization, far from being a universal benefit, it can generate governance risks and end up creating forms of economic restrictions
Although DREX is constantly presented as a modern and efficient innovation to the Brazilian financial system, the promised benefits may not make sense when compared to the potential harms that will accompany them. In this way, digital inequalities, threats to privacy and greater concentration of power in monetary issues may end up creating more challenges than solutions, particularly when it comes to the most vulnerable layers of society. Therefore, it is essential to exercise great caution when adopting the perspective that the new digital currency will represent an undeniable advancement for the economy
