Chainlink, Microsoft, Banco Inter collaborate on Brazil’s CBDC pilot

Banco Central do Brasil (BCB), Brazil’s central bank, has launched phase two of its Drex central bank digital currency (CBDC) pilot, targeting improvements in cross-border agricultural commodity transactions and supply chain processes.

Phase two focuses on building a trade finance solution using oracles and blockchain technology. The initiative brings together Microsoft, Chainlink, Banco Inter and 7Comm to explore automated trade settlements.

Chainlink, a decentralized oracle provider, will provide its Cross-Chain Interoperability Protocol (CCIP) to facilitate secure cross-platform transactions and enable a delivery-versus-payment (DvP) blockchain-based mechanism to improve transparency and efficiency.

The pilot seeks to integrate CBDCs and blockchain technology into Brazil’s economy to address inefficiencies in trade finance and promote financial innovation.

Related: Drex Brazilian CBDC pilot will work on privacy, DeFi in phase 2

Cross-border trade

The Drex phase two pilot will utilize blockchain technology to address inefficiencies in global trade finance. The project will feature the tokenization of electronic bills of lading (eBOL) and blockchain mechanisms like DvP and payment-versus-payment (PvP).

DvP involves asset transfers that occur only after payment confirmation, while PvP involves the simultaneous settlement of payments in different currencies.

These technologies will be tested to automate supply chain payments and enhance compatibility across platforms and currencies.

Related: Brazil tests DeFi elements, compatibility in Drex CBDC pilot

CBDC adoption collaboration

Banco Inter, a Brazilian digital bank, will lead the implementation of the Drex platform in the country, viewing the initiative as an opportunity to expand market access while strengthening the economy.

In a news release shared with Cointelegraph, Bruno Grossi, head of emerging technologies at Banco Inter, explained that the firm sees phase two as “an exciting moment for Brazil.” 

“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.”

Microsoft will contribute the cloud infrastructure required to support the project’s technical requirements, while 7Comm will provide the technical expertise in blockchain integration.

Related: Norway supports MiCA, considers CBDC for financial stability

Pilot integration of DeFi

The pilot is focused on solving the “trilemma” of decentralization, privacy and programmability, aiming to incorporate tokenization into the banking sector’s balance sheets.

Brazil’s Drex pilot phase two will extend to 2025, aiming to explore digital asset transactions, including liquidity pools for government bonds and international trade.

In addition to government initiatives, companies like Ripple are expanding cross-border crypto payment options in the country after announcing a partnership with the Brazilian Mercado Bitcoin exchange.

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