- Drex CBDC pilot phase 2 improves trade finance using blockchain.
- Microsoft, Banco Inter, Chainlink, and 7Comm have joined forces.
Brazil’s central bank, known as Banco Central do Brasil or BCB, initiated the second stage of its Drex central bank digital currency, centered on promoting trade financing and boosting efficiency in supply chains. Their pilot aims to help streamline cross-border agricultural commodity transactions and establish automated trade settlements with major participants Microsoft, Banco Inter, Chainlink, and 7Comm.
With the aim of enhancing the efficiency, transparency, and security of trade finance processes, Drex’s CBDC pilot will bring together blockchain and Oracle solutions. This is to simplify the complicated trade finance operations that have plagued companies for years. These operations have been marked by slow processing times, high costs, and the presence of intermediaries.
Blockchain and Oracles for Automated Trade Settlements
The Drex system features the second phase, which involves blockchain technology and oracles to create a trade financing product. A distinctive feature of the project is the use of Chainlink’s Cross-Chain Interoperability Protocol (CCIP), enabling a DvP mechanism in a blockchain-based form. That means they will execute asset transfers only after confirming payment. It increases transparency and efficiency in these trade processes.
In addition to DvP, the pilot will also cover the ability to settle multiple currencies simultaneously. It will utilize the concept of payment-versus-payment (PvP). Blockchain mechanisms, such as tokenized electronic bills of lading (eBOL), will facilitate cross-platform transactions.
The desired goal is to develop an effective and scalable framework for automating trade settlements. This may potentially reduce friction in cross-border trade and unlock new efficiencies in global commerce. This partnership marks one of the major steps in Brazil’s overall efforts to modernize its financial system and adopt digital currency technologies enhancing the broader economic landscape.
Banco Inter, the leading digital bank driving this initiative, sees in the Drex project an enormous opportunity to accelerate economic growth rates. It also aims to push market penetration. Bruno Grossi, head of innovative technologies at Banco Inter, was even more optimistic regarding the potential that this pilot represented. This is a promising step for Brazil’s future.
As the Drex CBDC pilot progresses, blockchain, oracles, and CBDCs are expected to transform global trade finance. This change will allow for faster, more efficient, and secure transactions across borders.
