reese_john

It is a testament to the bloat and overreach of the Brazilian state in the economy. Such endeavors should be left to the private sector

I suggest you go read the SFN messaging manuals from BCB if you truly want to understand how interbank communication works. It is very well documented.

You clearly don’t know what you are talking about since you are conflating the STR (transfer reserve system) with TED (one of the many settlement methods in STR)

I don’t even understand what you mean by “banks had to talk to each other” and why you are referring to TED in the past tense when it’s still the largest settlement method by BRL amount

Have you ever worked in a financial institution?

This is such a common occurrence that the BCB had to impose a default $200 nightly limit for Pix trns between 8pm and 6am.

The way it works is, criminals use money mules, or stolen identities, to open legitimate bank accounts, then once the cash hits the account, they fan out the stolen proceeds to crypto rails or other money mules (“laranjas”)

BCB has been trying to solve this with MED 2.0 but it is still a duct tape over the real problem: rampant crime and fraud in Brazil

And let’s not dive into the digital bank heists that have been happening since the last year, when hackers have already managed to steal hundreds of millions of dollars from the financial system by exploiting Pix’s 24/7 network [0]

Such attack to the financial system would have been akin to a war declaration in serious countries, but crime is so widespread and normalized that Brazilians lowered their standards to accept these absurd situations

  [0] Hackers steal R$400m in attack on Pix-connected fintech: https://valorinternational.globo.com/google/amp/markets/news/2025/07/02/hackers-steal-r400m-in-attack-on-pix-connected-fintech.ghtml

Second, good - they should have an _algorithm_ checking every transaction. MasterCard and VISA do it and do nothing for me;

You are confusing transaction authorization done by card networks/issuers with the kind of fraud analysis that happens post settlement and requires correlating multiple transactions and accounts

the government could catch all the money laundering

No, you don’t have enough information in transactions alone to identify all money laundering, specially the sophisticated kind.

… and yet they both suffer from availability issues despite not having nearly the same scale as e.g. Nubank who uses AWS

Caixa was down yesterday: https://www.techtudo.com.br/google/amp/noticias/2026/05/caix...

Yes, but my point was more nuanced, I didn't mean to say that the state needs a fully owned solution.

The original article opens up with "Pix is igniting a geopolitical and commercial battle."

The point I was trying to make, specially in the last paragraph, was that: Brazil doesn't really have full control, or the capability, to operate Pix without US infrastructure. Therefore, it is not smart, to engage in a geopolitical, ideological battle against the US. If Brazil wants to tough it out and claim sovereignty, then it must be willing to walk away and build its own infra.

Case in point: the recent US-Canada tensions were enough for the Canadian government to consider cancelling the purchase of American-made F-35 fighter jets.

Is the Brazilian government willing to do the same? Is it even in its best interest to do so? In my opinion, no, hence the aggressive anti-US rethoric from Lula must stop

I'm here just to clear out the confusion regarding the infrastructural pieces. The core PIX is undeniably sovereign and state-owned

Sure, I can see the confusion, I should have made that clearer.

Let me rephrase it: the "core PIX" is mostly an implementation of ISO20022 (pain,pacs, etc) messaging on top of HTTP APIs and BCB's own ledgers, plus a centralized KV datastore (Dict).

The implementation was excellent, but there is no technical moat in the "state-owned" part of the solution

The biggest technical challenges were, by design, delegated to the private sector, heavily relying on US hyperscalers to achieve Pix's operational requirements.

The "investigations" are political posturing. PIX is not "unfair business practice"

Agree

its a modern, cheap, state-of-the-art payments system that is better than what private businesses like MasterCard and Visa are willing to offer. I can think of plenty of ways they could offer actual value to customers so they can still be relevant.

This is a common misconception. Pix is a form of bank transfer, not a full blown payment infra like MC/Visa. They are different products, Pix doesn't make credit cards irrelevant.

Per BCB statistics: In 2020, before Pix implementation, credit cards accounted for 2% of the monthly BRL volume transacted (~ 200M BRL)

As of 2025Q4: credit cards still accounted .... for the same 2% (~ 800M BRL)

The main question is: historically, why haven't credit cards been more popular in Brazil, even before Pix?

You'll find your answer looking at structural issues (high interest, delinquency rates, bad credit offerings ...), not technical concerns

Banco Central controls the core, and that's all it needs to. This is good design. Descentralized, modern, resilient and efficient.

I agree. But was that not the case before Pix/SPI? It really didn’t change the status quo.

The STR (transfer reserve system), which SPI is still fully dependent in practice btw, is decentralized, modern and efficient.

The biggest change here was scale and adoption by private banks and end users, not sovereign infra.

US officials involving themselves in your national market because they are unhappy with the market share of their companies in it

Just to clarify, for anyone who’s been paying attention to the matter, it’s clear that the true reason for that Section 301 investigation is not due to Pix stealing market share of MC/Visa. In fact, if you check Brazil’s central bank own data, Credit Card usage has not gone down since Pix came in. What Pix really replaced was physical cash.

The fact is that Brazil’s (current) government has been publicly on the other side of Americans interests for a long time, even before Trump’s term. e.g. blatantly ignoring Iran sanctions https://www.cruz.senate.gov/newsroom/press-releases/sen-cruz...

Please, he literally went on national TV on Brazil’s Independence day to claim that

“We will defend PIX from any attempt at privatization. PIX belongs to Brazil, it's public, free, and will remain so.”

Lula has been historically hostile to the US for ideological reasons.

He’s done plenty to undermine that relation, stemming from attacking the dollar dominance, ignoring Iran sanctions, to indirectly financing the Ukraine war by becoming the largest buyer of cheap Russian oil — and that’s why we have those investigations going on

This is a minor technicality, if private banks are down then the SPI is basically useless. Banks can send money to each other but clients can’t see it.

What went down were apps

Plus, this is an oversimplification.

Transaction authorization, Fraud/AML screening, account validation are not just part of an “app”, they are core functionality of private banks operations, and they are made scalable by big cloud providers.

The true scaling burden is on private banks not the BCB

But mentioning Brazil's president on this meter just adds even more politics to the discussion.

This quote is literally from the linked article — he is mentioned there

Do you have the same opinion about the European leaders that are creating/created cloud infrastructure?

I don’t understand the question, I think it’d be great to have an European AWS equivalent just for the sake of competition, but as far as I know, we are very far from that

This is not a real problem outside of niche industries

American companies are great to do business with.

Most countries, including Brazil, simply don’t have the capability to pull this on their own. Not enough tech talent nor infrastructure

USD is a hard currency unlike the BRL. It is not supposed to move that fast by design. Google “Regulation E”. Brazil has no such strong provisions for protecting unauthorized transfers out of your account

It is worth noting that despite all this cheap sovereignty talk from Brazil’s president, in practice Brazil would not be able to operate Pix at that scale without heavily relying on American hyperscalers companies.

Brazilian institutions are paying hundreds of millions of dollars to US cloud providers, specially AWS, to be able to process that many transactions.

Earlier this year, when sa-east-1 was down, major banks were forced to suspend Pix payments for nearly 3 hours. When this happens, some people are literally not able to buy anything because that’s their only payment method. So much for “President Luiz Inácio Lula da Silva proclaiming a nationwide campaign: “Pix is ours, my friend”.”

Don’t get me wrong, Pix has been a great success and a major achievement, but all this adversarial political talk between the US and Brazil administrations is really cringe, both countries are better doing business together.

[1]https://economia.uol.com.br/noticias/redacao/2026/02/07/falh...

TED is still very much alive.

In fact, the BRL amount settled via TED is still higher than Pix, although the gap seems to be closing

The treasury has an account at the FED called TGA[0] which is funded by tax payments and proceeds from new Treasuries issuance

https://en.wikipedia.org/wiki/Treasury_General_Account

The total number of dollars that exist in circulation is reduced.

Not accurate. Dollars are a liabilities on the books of the Federal Reserve. Tax payments to the federal government only cause a liability shift from commercial banks’ reserves at the FED to the TGA, it doesn’t really change the net amount of dollars in circulation.

The most you could argue is that it momentarily reduces the net commercial banks’ liabilities (which economists call M*) until the Treasury distributes those dollars again to the broad economy

Perfectly implements" is doing a lot of work there. Enterprise software is very rarely perfect out of the box

Fair, by “perfectly implements” I meant to say that it correctly implemented the core invariant of a double entry ledger (debits = credits), not that it was 100% bug free

If you are a company founder, what scenario would you rather find yourself in?

a) a pristine, good codebase that follows the best coding practices, but it is built on top of bad specs, wrong data/domain model

b) a bad codebase but it correctly models and nails the domain model for your business case

Real life example, a fintech with:

a) a great codebase but stuck with a single-entry ledger

b) a bad codebase that perfectly implements a double-entry ledger

With CRS and FATCA, no one is hiding their wealth just by having offshore assets.

Owning offshore assets also doesn’t automatically exempt you from paying taxes, since your tax liability is mostly determined by your tax residency.

  Just a fraction of that money could end extreme hunger and provide clean water to everyone on Earth.

  Why build each new airplane with the care and precision of a Rolls-Royce? In the early 1970s, Kelly Johnson and I [Ben Rich] had dinner in Los Angeles with the great Soviet aerodynamicist Alexander Tupolev, designer of their backfire Bear bomber. 'You Americans build airplanes like a Rolex watch,' he told us. 'Knock it off the night table and it stops ticking. We build airplanes like a cheap alarm clock. But knock it off the table and still it wakes you up.'...The Soviets, he explained, built brute-force machines that could withstand awful weather and primitive landing fields. Everything was ruthlessly sacrificed to cut costs, including pilot safety.
  We don't need to be ruthless to save costs, but why build the luxury model when the Chevy would do just as well? Build it right the first time, but don't build it to last forever. - Ben Rich in Skunk Works

This seems to be a short range (290km) anti-ship cruise missile. Definitely not an unstoppable carrier killer

What could threaten US carries are China’s DF-21D/26D – anti-ship ballistic missiles with reported ranges of > 2000km – and Iran is not getting them

https://nationalinterest.org/blog/buzz/chinas-carrier-killer...

Not an accountant, but I think this is false

If you intend to hold to maturity then you should accrue the bond coupons over time, that’s the modal case

If part of your bond portfolio is available for sale, then you should use mark-to-market accounting, which prices in the present value of future coupons and the discount rate as well.

IIRC this was one of the issues with the failure of SVB, they were forced to sell their bonds and realize a huge MtM loss

Most cloud providers have a similar offering to AWS Lambda, plus it is not that hard to convert your code from the event handling pattern impose by AWS Lambda to a long running container running in K8s or VMs like you are doing yourself

IMO the lock-in fear is overblown as the top cloud offerings (S3, Lambdas, K8s as a service etc) are already commoditized among the top providers, the exception being specialized databases like DynamoDB, Spanner, Cosmos …

Not saying there wouldn’t be some major work to switch your operations from eg AWS to GCP, but it is also not a hard lock-in

Lee Kuan Yew on what made Singapore successful:

  “Air conditioning. … It changed the nature of civilization by making development possible in the tropics.
  Without air conditioning you can work only in the cool early-morning hours or at dusk. The first thing I did upon becoming prime minister was to install air conditioners in buildings where the civil service worked. This was key to public efficiency.”

S3 has a low-latency offering[0] which promises single digit millisecond latency, I’m surprised not to see it mentioned.

[0] https://aws.amazon.com/s3/storage-classes/express-one-zone/

It's true that formal wealth systems (like land, stock ownership and trademarks) require an elaborate legal and cultural infrastructure to maintain — but only at scale. The absence of such systems doesn't eliminate wealth inequality, it just changes how it's enforced.

In less formal or collapsed systems, wealth and resources are often controlled by a ruling oligarchy or individuals whose hard power acts as a de facto property right.

For example, many argue that Vladimir Putin is one of the wealthiest individuals in the world, despite lacking formal ownership on paper — his political and military power effectively grants him control over immense resources. Wealth inequality ultimately stems from control over resources, whether legitimized by law or enforced through power.

Note: the article seems like a subtle ad for the booming industry of private credit.

The author is the co-founder of Oaktree Capital, which has been raising capital for one of the largest private credit funds ever[0]

https://www.bloomberg.com/news/articles/2023-08-10/oaktree-t...

  "Moving on to the real world, I note that following a sea change in interest rates, non-investment grade public and private debt now offer prospective returns that are competitive to those historically seen on equities. I believe investors should consider shifting capital to this area if they are (a) attracted by returns of 7 to 10 per cent or so, (b) desirous of limiting uncertainty and volatility, and (c) willing to forgo upside potential beyond today’s yields to do so. For me, that should include a lot of investors, even if not everyone."