Brazil's central bank is advancing its digital currency pilot, Drex, into the realm of trade finance, aiming to automate the settlement of agricultural commodity trades. This expansion involves a collaborative effort between banks, technology companies, and blockchain experts to streamline transactions through smart contracts.
The pilot uses a digital version of the Brazilian real and a blockchain-based platform to enable simultaneous transfers of ownership and funds once contractual conditions are met. As the central bank explains, this ensures both parties in a transaction can fulfil their obligations securely and efficiently.
The second phase of Drex will focus on cross-border agricultural trade, employing tokenised electronic bills of lading and incorporating supply chain data. Payments to suppliers will be automatically triggered based on the fulfilment of predefined criteria.
Blockchain platform Chainlink, a key participant in the project, highlights its potential to enhance efficiency, security, and transparency in commodity trading. “The pilot will showcase what tokenised assets can do at scale,” says Angela Walker, global head of banking and capital markets at Chainlink Labs. She emphasises that the initiative demonstrates the transformative potential of blockchain technology and interoperability protocols like Chainlink's CCIP.
Digital lender Banco Inter is spearheading implementation within Brazil, with Microsoft providing cloud services and 7COMm supporting technical delivery. Banco Inter’s head of emerging technology, Bruno Grossi, views the project as “a transformative opportunity to expand market reach and improve the health of the Brazilian market.” João Aragão, Microsoft’s innovation specialist for financial services, adds that Drex is also designed to “broaden access to intelligent financial services.”
The initiative underscores the growing importance of blockchain in global trade. Walker notes that it represents a “key” use case for central bank digital currencies, demonstrating their ability to settle transactions through tokenised versions of national currencies. Chainlink and its partners look forward to showcasing how Drex and its underlying technology can revolutionise trade finance.
Original article by John Basquill for Global Trade Review (GTR). Read more here or in the PDF below.
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