The only Brazilian registered at a hearing on pricing defends PIX and calls for a technical debate: 'We have to get out of the rhetoric'

Gustavo Pessoa, professor of Economics at Fundação Getulio Vargas (FGV) and researcher of risks in the financial system
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So far, only one Brazilian has signed up to participate in the public hearing that could influence the next direction of the trade dispute between Brazil and the United States. Gustavo Pessoa is an Economics professor at Fundação Getulio Vargas (FGV) and a researcher on risks in the financial system.
The hearing is scheduled for July 6 and precedes the US government's final decision on possible trade measures. Companies, associations, governments and other interested parties will be able to present their positions.
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The process is conducted by the Office of the US Trade Representative (USTR), which investigates practices related to Brazilian products and is still in the information collection phase.
The investigation covers different topics, including illegal deforestation, piracy, failures in the application of anti-corruption laws and PIX - an instant payment system created by the Central Bank that began to play a central role in the investigation.
⚖ Registration remains open until June 22. The statements sent officially become part of the process and may influence the next developments in the investigation.
Pessoa states that he decided to register because he considers that the debate about PIX is no longer just about a means of payment and has started to involve the infrastructure of the financial system. For him, the process requires technical explanations and space for different points of view.
"It is important that someone appears independently to try to explain this in a slightly better way and even point out a way to resolve the issue in the technical field."
In an interview with g1, the economist comments on the US's questions about the PIX, discusses the BC's role as regulator and operator of the system and states that transparency and institutional dialogue can be more effective than broad commercial measures.
g1 - You asked to participate in the public hearing from USTR at a time when there are few registrations. What motivated this initiative and what contribution do you believe it can bring to the debate?
Gustavo Pessoa: I am an Economics professor at FGV and I research systemic flaws in the financial system. So, it's a topic that I've been researching for a long time. And this PIX issue is very sensitive because, if we analyze today, more than 54% of all transactions in Brazil are carried out via PIX. So, the discussion stopped being just a question of payment method and became a question of infrastructure.
And everything related to infrastructure, with more than half of all processing going through it, creates a question of potential systemic risk. Today, PIX transacts more than twice Brazil's GDP - we are talking about something around R$25 trillion per year, which makes it a very important tool.
The second issue is that there may be a conflict of interest between the Central Bank, which is the regulator, and also the provider of this service. Of course, this investigation is much broader than just the PIX issue. It involves commercial practices, the ethanol issue and other topics, but I am sure that the core of everything is the PIX issue.
I wanted to join this process to bring a more technical and independent view, because we know that a large part of the discussion is a political issue between governments. So, it is important that someone appears independently to try to explain this a little better and even point out a way to resolve the issue in the technical field.
g1 - One of USTR's main questions is the fact that the Central Bank acts, at the same time, as regulator and operator of PIX. What would be the possible problems with this structure and to what extent is this concern legitimate?
There is a problem because the Central Bank is acquiring a new function that it did not have. Until then, it had the role of regulating financial institutions. Now, from the moment it offers a service directly to citizens, it ends up being a kind of competition for other payment methods and other financial institutions.
So, from the moment it offers a new service, it also has to provide the same transparency that another operator would provide. What would that be? Space for competition, more transparency and a certain backup against failures. So, he has to provide certain safeguards that until now he didn't need to offer, but this is because he has assumed a new role in society.
I believe they have all this to do. It is a matter, of course, of organizing and showing that there is governance to offer this new service. But it is also important that there is transparency and that this ability to operationalize the system is demonstrated.
g1 - In the registration document, you propose the creation of a "neutrality test for digital payments". What does neutrality mean in this context and how could this test be applied, in practice, to evaluate a system like PIX?
Yes. In fact, in the documents I attach to this process, I say that we should establish a neutrality testing system. Basically, it would be testing five questions.
One of them would be in relation to access: testing whether all companies, whether Brazilian, North American or from other countries, have access to this payment method, PIX. Then, it is checked whether access is equal for all companies or whether there is any discrimination.
The other issue is interoperability [the ability of different systems and platforms to exchange information and work with each other]. So, we see the technical issue: whether the APIs work for both the PIX and the credit card, whether they meet cybersecurity requirements and everything else.
Another issue is transparency, checking whether rules related to fees, supervision and application standards work in the same way.
Another is in relation to data, because today the Central Bank takes care of PIX data. In the case of credit cards, it is the operators. They follow a series of regulations and standards to ensure the protection of this data. So, it's also important to show this.
And the last issue is data integrity, involving support, anti-money laundering, "know your customer" and compliance.
So, everything that the Central Bank requires from credit, debit card operators, etc., does it also do with PIX? It is important to provide more clarity on this for the general public.
g1 - You argue that specific measures would be more effective than broad tariffs in addressing concerns related to digital payments. What kind of regulatory or institutional commitment could respond to US concerns without compromising the benefits of PIX?
When you read the process, it seems serious and presents valid hypotheses, but they are waiting for answers.
Of course, it is a very broad question, but the process gives room for the right to defense. So, I believe that, by presenting these answers and showing how the BC is committed to transparency, to the integration of other systems and to non-discrimination of participants, this would be very well received.
And, of course, I think that a clearer communication forum should be created involving the Central Bank, the Ministry of Finance and the US Department of Commerce, because this involves much bigger issues.
g1 - PIX is often compared to India's UPI, which handles an even greater volume of transactions. In your opinion, why did the Brazilian system end up becoming the target of this US investigation?
Our banking system is very different. Our social reality is also very different. And the success of PIX is much greater. Brazil has a greater connection with other Latin American countries because it is a regional leader and is able to dialogue with these countries.
So, it seems to me that it is much more a geopolitical and geostrategic issue than anything else. Attention turned to PIX because we are the nation most similar to the USA in terms of payment methods, in terms of society and the market. So, they can compare us with them, something they can't do in the same way with India or China.
g1 - What do you expect from this audience? Do you believe there will be room for technical contributions, like yours, to be considered by American authorities?
As a researcher and professor, we always try to say what we studied and what we consider correct. Now, whether the other side will understand or open space is another question. We have the duty to expose what seems minimally plausible to us. If something happens and I am called for a hearing, I will be happy to do so and make myself available.
The question that remains is that we have to follow all the protocols, even if they seem inert. If we do not defend ourselves, we may be accused of not having defended ourselves. An investigation was opened, a response was awaited and there was no defense. This kind of thing cannot happen.
For better or worse, we have very solid institutions, a very qualified Itamaraty and a Ministry of Finance with excellent employees. So, it is important to use all the official space we have. Because, if we rely solely on unofficial conversations, statements and everything else, we may miss opportunities to show real substance. We have technical work and documents to present. It's not just guesswork.
So, we have to get out of the rhetoric and really start positioning. Whether this will work or not is another question. But it is important to show substance in all the official channels we have available.
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Source: G1