Welcome to Latam Insights, a compendium of the most relevant crypto and economic news from Latin America over the past week. In this week’s edition, the International Monetary Fund (IMF) approves a $1.4 billion credit facility for El Salvador, Brazil states it will spearhead the development of BRICS-native payment systems, and the Brazilian CBDC hits a potential privacy roadblock.
Bitcoin Purchases Confined: IMF Approves $1.4 Billion Credit Facility for El Salvador
The International Monetary Fund (IMF) has finally greenlighted a deal that was informally approved last year, granting the Salvadorean government a $1.4 billion credit facility. The arrangement seeks to improve Salvadoran finances in exchange for implementing a program that limits Bukele’s administration’s bitcoin moves.
The fund’s Executive Board passed the $1.4 billion loan and executed an immediate disbursement of $113 million. This is only the first tranche of the agreement, with the remaining funds being distributed in the next 40 months.
Furthermore, the fund expects this commitment to entice other organizations to offer their support to the Salvadoran administration, estimating that the total support would reach over $3.5 billion.
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BRICS Payment Systems Are Coming—Brazil’s 2025 Plan Could Change Everything
Brazilian President Luiz Inacio Lula da Silva announced on Feb. 26 that Brazil will focus on developing secure payment systems during its BRICS presidency in 2025. Speaking at the BRICS Sherpas meeting in Brasilia, Lula da Silva stated:
Brazil is going during the period of its presidency to fully develop … transparent and safe payment systems.
The initiative is part of a broader strategy to strengthen financial infrastructure among BRICS nations, potentially reducing reliance on Western financial systems and enhancing economic cooperation within the bloc.
In addition to secure payment systems, Lula da Silva emphasized the need to expand trade between BRICS countries to further solidify their economic ties.
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Central Bank of Brazil: CBDC Privacy Problem Still Unresolved
The pilot of the Brazilian central bank digital currency (CBDC) has hit a roadblock. In a recently issued report detailing the results of the first phase of the pilot project, which finished last year, the Central Bank acknowledges that the possible implementation of this currency still lacks a key attribute: privacy.
The report states that, even after having examined several security approaches and technologies, the pilot has been unable to find an application that satisfies the needs of drex.
Three solutions were tested: Zether (by JPMorgan and Consensys), Rayls (by Parfin), and Starlight (by EY). While all of these serve to obfuscate the details of the transactions for third parties, they also hide them from the authorities, who must be able to review them for monitoring and compliance purposes, serving as an equivalent to bank transfers.
Read more.
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