Brazil's central bank chief predicts end of credit cards

BY Reuters | ECONOMIC | 08/12/22 09:36 AM EDT

BRASILIA (Reuters) -Brazil's central bank chief Roberto Campos Neto on Friday said he believes credit cards will cease to exist soon due to the growth of the open finance system, through which clients authorize financial data sharing with different institutions.

Open finance is a central bank project that has been implemented in phases since 2021.

Speaking at an event about cryptocurrencies, Campos Neto projected that, through the system, users will control all aspects of their financial life in one "integrator" on their mobile, rather than having many apps from different banks.

This will allow the development of cash management products for individuals and users to choose between making payments with the Pix instant payment system by debit or credit, he added.

"This system eliminates the need to have a credit card. I think that credit cards will cease to exist at some point soon," said Campos Neto, noting that banks have already started using Pix to offer credit.

Launched by policymakers in 2020, Pix allows real-time transfers and payments and has been widely adopted by Brazilians, already surpassing the volume of credit and debit card transactions in the country.

According to Campos Neto, Pix could first expand "at least" to Latin America. He said Canada has also shown interest in the system.


During the event, Campos Neto said he disagreed with heavy regulation of crypto assets, but stressed concerns on custody concentration, since four companies currently hold 80% of crypto assets.

He also said he was concerned about the risk of transaction concentration, with "one or two platforms holding 20-30% of the market."

According to the central bank chief, regulators in Brazil want to ensure cryptocurrencies have transparency in how they are traded, created and transacted.

(Reporting by Marcela Ayres; Editing by Mark Porter and Philippa Fletcher)

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.