This Brazilian Bank Is Using Ethereum to Issue a Stablecoin

A state-owned bank in Brazil is about to issue a crypto token designed to maintain parity with the national currency.

Revealed exclusively to CoinDesk, the Brazilian National Social Development Bank will launch a pilot in January 2019 for the BNDES token, which runs on the ethereum blockchain and is backed 1-for-1 by Brazilian real.

The bank has been experimenting with the stablecoin throughout 2018 and will now use it for tax-deductible contributions to cultural institutions.

ConsenSys, the ethereum design studio, will be among the companies consulting the bank during this process.

For the pilot, the bank will issue several hundred dollars worth of BNDES to the National Film Agency, a film distribution company called El Cine for short, to create and promote scripts and movie productions in Brazil.

Since the bank has a history of corruption scandals involving misallocated funds and alleged bribes, the pilot creators hope public BNDES blockchain data will help bolster trust in state-owned banks.

Recipients will only be able to redeem the stablecoin through the bank for local currency.

That's because the government-run development bank manages funding for projects ranging from educational initiatives to building infrastructure like roads and dams.

Gladstone Moises Arantes, Jr., technical lead of the BNDES blockchain initiative, told CoinDesk the bank will reevaluate the results of this pilot and consider expanding it to other organizations that receive public funding.

BNDES token initiative team image courtesy of the Brazilian National Social Development Bank.