The Banco Central do Brasil (BCB) has initiated the second phase of its Drex central bank digital currency (CBDC) pilot, aiming to address inefficiencies in cross-border agricultural commodity transactions and supply chain processes. The project is set to enhance trade finance using blockchain technology and decentralised oracles, signalling Brazil’s commitment to integrating digital assets into its economy.
Brazil Setting Up Key Partnerships and Blockchain Technology Integration
Phase two of the Drex pilot brings together a powerhouse of industry players, including Microsoft, Chainlink, Banco Inter, and 7Comm, to develop automated trade settlement solutions. Chainlink, a decentralised oracle provider, will deploy its Cross-Chain Interoperability Protocol (CCIP) to enable secure cross-platform transactions. This will facilitate a delivery-versus-payment (DvP) mechanism, designed to boost transparency and efficiency in trade settlements.
In addition, Microsoft will supply the cloud infrastructure to support the project’s technical framework, while 7Comm will contribute expertise in blockchain integration.
Leveraging Blockchain for Tokenized Trade
At the heart of this pilot is the tokenization of electronic bills of lading (eBOL) and the application of blockchain-based mechanisms like DvP and payment-versus-payment (PvP). DvP ensures asset transfers only occur after payment confirmation, while PvP enables the simultaneous settlement of payments across different currencies. These innovations aim to streamline trade finance and bring greater efficiency to global trade.
Banco Inter, one of Brazil’s leading digital banks, will spearhead the implementation of the Drex platform. The bank sees the initiative as an opportunity to expand market access and bolster Brazil’s economy.
“We see collaborating in this project with technology leaders like Microsoft and Chainlink Labs as a transformative opportunity to expand market reach and improve the health of the Brazilian market,” said Bruno Grossi, head of emerging technologies at Banco Inter.
The Drex pilot is part of a broader strategy to address the “trilemma” of decentralisation, privacy, and programmability. By incorporating tokenization into banking sector balance sheets, the pilot seeks to unlock new efficiencies in liquidity pools for government bonds and international trade transactions.
The second phase of the project is expected to run through 2025, reflecting Brazil’s long-term vision for financial innovation.
Ripple Expands Cross-Border Payment Options
Parallel to government-led initiatives, private sector players like Ripple are also advancing Brazil’s digital economy. Ripple recently announced a partnership with Brazilian cryptocurrency exchange Mercado Bitcoin, aiming to expand cross-border crypto payment options in the region.
By blending public and private sector efforts, Brazil is rapidly positioning itself as a leader in leveraging blockchain and CBDCs to reshape its financial landscape.
