FILE PHOTO: A person pays using their cell phone with the instant electronic payment mode known as PIX, at a store in Rio de Janeiro, Brazil April 1, 2024. REUTERS/Pilar Olivares/File Photo

BRASILIA (Reuters) -Brazil's central bank is not competing with financial or payment institutions through its operation and regulation of the widely used instant payments system Pix, said Renato Gomes, the institution's financial system organization director.

In remarks released by the central bank on Wednesday, Gomes said the institution "plays the role of a neutral agent, providing a public digital infrastructure that allows the market to develop more efficiently, inclusively and competitively."

Pix is among the Brazilian trade practices under formal investigation by U.S. President Donald Trump's administration in a case opened by the Office of the U.S. Trade Representative (USTR), which views the system as potentially unfair.

Launched in late 2020, Pix quickly became Brazil's most used payment method, sharply eroding the share of cash, cards, checks, bank slips and other forms of payment in Latin America's largest economy.

By cutting out intermediaries, Pix has squeezed revenue from card networks such as Visa and Mastercard, card processors including Cielo, StoneCo, PagBank and Getnet, and banks that once charged more for traditional transfers.

Gomes said Pix helped bring 80 million individuals into the financial system until 2023, driving rapid digitalization of the financial and payments industry, which he stressed benefits everyone.

"After Pix was implemented, the use of payment cards has continued to grow," he said.

According to the director, relying on the private sector to build essential payments infrastructure had failed in Brazil, prompting the central bank to begin this project in 2018 after repeated industry attempts fell short.

"The market is good for competition and innovation, but less effective when the goal is to provide a public good through private effort," he noted, emphasizing that the market tends to undersupply interoperability, resulting in concentration, low innovation and high prices.

"As the central bank's mandate is to ensure safety, competitiveness and efficiency in payments, and not to profit from Pix, there are no pecuniary interests that could create conflicts," Gomes said.

(Reporting by Marcela Ayres; Editing by Gabriel Araujo, Leslie Adler and Paul Simao)