Brazil's CBDC pilot supported by Microsoft and Chainlink

Banco Central do Brasil has initiated phase two of its Drex central bank digital currency (CBDC) pilot, focusing on enhancing trade finance and cross-border transactions.

This phase involves partnerships with Microsoft, Chainlink (CRYPTO:LINK), Banco Inter, and 7Comm, integrating Blockchain technology to streamline trade settlements.

Chainlink’s Cross-Chain Interoperability Protocol (CCIP) will be used to support secure, cross-platform transactions, enabling delivery-versus-payment (DvP) mechanisms.

These mechanisms aim to ensure that asset transfers are only completed upon payment confirmation, promoting better transparency and efficiency in transactions.

The pilot will also incorporate payment-versus-payment (PvP) solutions for simultaneous currency settlements.

Microsoft will provide the necessary cloud infrastructure to meet the technical demands of the project.

Banco Inter, a digital bank in Brazil, will lead the implementation of the Drex platform.

"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," stated Bruno Grossi, Head of Emerging Technologies at Banco Inter.

Phase two includes the tokenisation of electronic bills of lading (eBOL), contributing to a more efficient cross-border trade system.

The pilot will focus on decentralisation, privacy, and programmability challenges while exploring the use of tokenised assets within banking operations.

This initiative is set to run until 2025 and aims to introduce new solutions such as liquidity pools for government bonds and international trade.

The Drex pilot highlights Brazil’s approach to merging blockchain technology with financial systems to boost economic efficiency.

Meanwhile, other firms, including Ripple, are expanding cross-border payment options, signaling a broader adoption of blockchain in Brazil's financial sector.

At the time of reporting, the Chainlink (LINK) price was $14.58.