On December 16, the Central Bank (BC) published a document entitled “Report on Social, Environmental and Climate Risks and Opportunities” and below are the main highlights selected by Greentimes.
PIX
Pix is a means of payment created by BC in November 2020, whose objective was to ensure greater financial inclusion, democratize access to digital means of payment, leverage competitiveness, lower costs and encourage electronics in retail.
For the consumer, the great advantage is the instant transactions that can be made at any time, 7 days a week. The main users are low-income young people, and around 75% of the population aged over 14 have already had some contact with the pix, whether sending or receiving amounts, by September 2022.
With regard to the corporate environment, approximately 11 million have already carried out at least one transaction in the same period, demonstrating that 76% of companies already have some relationship with the national financial system. Retail and e-commerce are the main users of this system.
real digital
The digital real has been the subject of study by the BC, which even ended up creating a forum to maintain the debate on this agenda. So far, progress has been made from a practical point of view with:
- Publication of digital currency guidelines that include smart contracts, ability to perform operations offlinepromoting financial inclusion and sustainable finance’;
- Disclosure of the topic to society by opening a dialogue channel on possible applications.
According to the BC, if the current model of the digital real is implemented, this will allow the BC to “follow the dynamism of the technological evolution of the Brazilian economy, promote the efficiency of the retail payment system, contribute to the emergence of new business models and other innovations based on recent technological advances and favor the integration of Brazil into the regional and global economic scenarios through increased efficiency in cross-border transactions”.
strategic risks
The BC, as expected, carries out its risk management precisely to measure the uncertainty that external/internal events have on the strategy outlined for the institution. In addition, the impacts, magnitude and probability of their occurrence are also observed.
That said, among the many risks identified, attention is drawn to the possibility of increased inflation due to environmental issues and the impacts of climate change on the agricultural sector, for example.
Increased inflation due to environmental issues
The increase in inflation, according to the BC, may be influenced by environmental issues with regard to the effects of extreme/chronic weather events associated with climate change, and the pressure for a low-carbon economy. Concretely, this can be seen through the reflection that the lack of rain had on food prices in 2021.
Impacts of climate change on the agricultural sector
Climate change can affect the agricultural sector and affect the economy in general. An example of this was the revision of the GDP projection for 2022, where the growth of agriculture fell from 5% to 2% due to the lack of rain in the south in the center-south of the country (PR, SC, RS and southern MS) , hitting soy and corn hard.
Source: Central Bank
