For the second stage of its Central Bank Digital Currency (CBDC) experiment, the Central Bank of Brazil is continuing with 13 themes.
The Central Bank of Brazil (BCB) has announced the selection of 13 themes for the second phase of its Central Bank Digital Currency (CBDC) pilot, known as Drex. This phase will focus on testing financial services through smart contracts managed by third-party participants.
The Securities and Exchange Commission (CVM) and the BCB worked together to select themes from a pool of forty-two use case proposals that addressed a variety of financial services, such as car transactions and foreign exchange market optimization.
Important international players like Santander and Visa are expected to be heavily involved in this stage. This demonstrates the increasing significance of the pilot on a global and national scale.
Visa and Santander AMongst Other Key Participants and Projects
The second phase of the Drex pilot includes a diverse group of participants, comprising 16 consortia or companies, who will test and develop essential resources for the platform’s operation.
Notable participants include Visa and Santander, two major global players.
Visa will concentrate on foreign exchange market optimization in collaboration with XP and Nubank. This is a calculated move to use the infrastructure of the CBDC to expedite cross-border transactions.
However, in line with international sustainability objectives, Santander plans to investigate the possibilities of CBDCs in auto transactions and will also work on a project pertaining to credit transactions and decarbonization.
The central bank is in charge of 11 of the 13 themes that have been chosen, while the securities regulator is in charge of two. The BCB has split up the 13 themes between it and the CVM.
These themes cover a wide range of financial applications, including real estate and agribusiness asset transactions, trade finance, and credit transactions.
For instance, consortia like BB, Caixa, and SFCoop will study “Real Estate Transactions,” while major banks like Bank of Brazil, Bradesco, and Itaú will be involved in themes like “Credit Collateralized in CDB.”
CBDC Brazil: Applications To Be Opened Again In Q3 2024
The second phase of the Drex pilot will concentrate on improving the way privacy solutions work with smart contract implementations to deliver financial services.
Every theme that has been chosen will function within specific debate spaces where participants and regulators work together to improve governance frameworks and approaches for incorporating these services into the larger financial system.
In the third quarter of 2024, the BCB intends to release a fresh call for applications from organizations interested in participating in the Drex pilot.
“During the third quarter of 2024, the BC will open a call for new application proposals from entities interested in participating in the Drex Pilot. Those selected must test the implementation of smart contracts by the end of the first half of 2025.”BCB said.
By the end of the first half of 2025, this action seeks to test the full implementation of smart contracts and increase participation.
BCB’s dedication is also demonstrated by the strategic alliances it has formed with important industry participants and authorities.
This Drex pilot phase is a big step toward realizing digital currencies’ potential to improve financial inclusion and operational efficiency within Brazil’s financial system, even though there is a lot of conjecture about what CBDC intends to accomplish.
The results of these experiments will probably determine the direction of digital finance in Brazil.
We are eager to watch the Drex pilot’s final results because it has the potential to be a major factor in Brazil’s digital revolution.
Notably, earlier this year, the central bank unveiled a multi-phase plan to regulate crypto and virtual asset service providers, setting the stage for Crypto adoption in the country.
The regulatory proposals are intended to be finalized by the end of the year, so we will have to plan for any later in the year.