Home Policy & Governance Brazil’s LIFT Lab operations ‘suspended indefinitely’

Brazil’s LIFT Lab operations ‘suspended indefinitely’

Brasilia: the capital is home to Banco Central do Brasil’s headquarters | Credit: janio_df (Pixabay)

An accelerator-style initiative backed by Brazil’s central bank has had its operations ‘suspended indefinitely’.

LIFT Lab (Financial and Technological Innovations Laboratory) was launched by the Banco Central do Brasil (BCB) alongside the National Federation of Associations of Central Bank Servers (Fenasbac) more than five years ago. It sees BCB officials and sponsoring organisations advising on the development of annual cohorts of early-stage fintech-based projects.

The BCB revealed on 25 August the nine projects selected for the 2023 edition. But, in an unorthodox turn of events, used the same announcement to state that the ‘current LIFT Lab is suspended indefinitely due to operational and human resource limitations.’

‘The new schedule for developing the nine selected projects will be communicated in due course,’ states the ‘LIFT Lab: Meet the projects selected in 2023’ announcement.

‘It will be up to the LIFT management committee, composed of representatives from different areas of the BCB, to evaluate and re-plan the portfolio of ongoing initiatives in view of other institutional deliveries to society,’ the announcement adds, providing no further details on the ‘operational and HR limitations’.

RELATED ARTICLE Brazil names CBDC ‘Drex’ as central bank expands tests of DLT-based platform – our news story (21 August 2023) on the BCB’s progress towards the launch of a central bank digital currency

Nine projects picked from 95 applications

The bulk of the BCB’s communication reflects the announcement’s title, focusing on the composition of this year’s cohort of projects.

The BCB, which is headquartered in capital city Brasilia, states in its announcement that 95 projects – a record number – applied this year, with the management committee choosing the successful nine after a ‘through assessment’ during July. The selected proposals relate to ‘themes’ such as Pix, which is the instant payment system launched by the central bank in 2020, and blockchain.

The nine projects listed in the BCB’s announcement include three with Pix actually forming part of their title: ‘Pix Card’; ‘Pix Debita Lá’; and ‘Pix Key Score’.

“The projects selected involve relevant themes of the BCB’s innovation agenda, such as blockchain, asset tokenisation, crypto-assets, Pix, socio-environmental responsibility, and innovations for improving know-your-customer [KYC] processes and preventing money laundering,” said Aristides Cavalcante, who is deputy head of the BCB’s IT department (alongside other roles at the central bank).

The same announcement includes stats totting up the LIFT Lab’s achievements to date, including that 91 projects have been selected as part of LIFT Lab cohorts, of which 76 have been ‘finalised’. More than one third – 37 per cent – of LIFT Lab ‘finalist projects’ have received investment from the private sector ‘during or shortly after the acceleration’, adding up to more than over BRL 400 million (about £64m/$81m), it states.

RELATED ARTICLE Brazil selects nine proposals to develop digital currency – our news story almost 18 months ago (14 March 2022) on the BCB announcing that nine projects had been selected for the ‘LIFT Challenge Real Digital’ (a ‘special edition’ of the LIFT Lab focused on central bank digital currency)

BCB’s digitalisation agenda

LIFT Lab has – to date, at least – served as to exemplify how a growing number of central banks worldwide are seeking to encourage private-sector fintech projects.

In Brazil major payments modernisation and digitalisation initiatives being driven by the central bank include, as well as Pix, experimentation surrounding a potential central bank digital currency (CBDC); and encouraging the rollout of open banking and open finance.

In respect of the latter area, Cavalcante posted on LinkedIn this week that the first in-person meeting of the ‘Deliberative Council of Open Finance’s Governance Structure’ had taken place.

Staff at Brazil’s central bank went on strike last year, calling for wage increases among other demands. ‘Brazil’s inflation is so bad even central bank workers protest’ ran the headline of one report (on 3 May 2022) from the news agency Bloomberg.

In respect of LIFT Lab, ‘partners that promote, support and strengthen this initiative’ (‘Parceiros que promovem, apoiam e fortalescem essa iniciativa’) listed on the LIFT Lab website (at time of writing – 1 September 2023) are companies including AWS, Microsoft and R3.