Brazil Launches Second Phase of Drex CBDC Pilot to Automate Trade Finance

Banco Central do Brasil (BCB) has launched the second phase of its central bank digital currency (CBDC) pilot project, focusing on the development of a trade finance solution utilizing blockchain oracles.

Officials from Brazil’s central bank announced the start of the second phase of the Drex CBDC pilot, which aims to automate supply chain management and enhance trade finance processes. Technical partners in the project include Chainlink, Microsoft, Banco Inter, and 7Comm.

The second phase involves tokenizing the electronic bill of lading (eBoL) on the blockchain network. It will use supply chain data to initiate payments to exporters throughout the delivery process. The solution demonstrates how blockchain-based trade finance can enable the settlement of delivery versus payment (DvP) and payment versus payment (PvP) schemes.

In Phase 2, the roles of the partners are defined as follows:

• Chainlink will serve as the carrier for the Cross-Cellular Interconnection Protocol (CCIP);
• Microsoft will provide cloud infrastructure access;
• 7Comm will handle the technical implementation of the blockchain solutions;
• Banco Inter will act as a payment provider to process cross-border transactions using Drex.

Overall, the pilot project aims to automate the settlement of agricultural commodity transactions involving participants from different countries, platforms, and currencies. The primary goal is to increase efficiency, security, and transparency in international trade and global agricultural supply chains.

A month ago, the Head of the Central Bank of Brazil noted that the CBDC pilot project features a multi-dimensional structure designed to address three main issues in traditional finance (TradFi): low decentralization, privacy, and programmability. He also announced plans to test elements of decentralized finance (DeFi) within the Drex pilot.