- Brazil’s Central Bank partners with Microsoft, Banco Inter, and Chainlink to launch a blockchain-based trade finance system.
- DREX pilot integrates blockchain and oracles to tokenize trade documents, streamlining cross-border payments.
- Chainlink’s CCIP will enable DREX to operate with foreign CBDCs, enhancing cross-currency and cross-chain trade.
The Central Bank of Brazil (BCB) has partnered with a large group of technology companies to design a new trade finance system using blockchain. The partnership also involves financial services company Banco Inter, Microsoft Brazil, tech company 7COMm and smart contract provider Chainlink. This project is included in the second wave of Brazil’s Digital Real (DREX) pilot program, which is intended to improve supply chain finance, automate trade finance, and thus optimize trade flows.
The project revolves around the idea of integrating blockchain and oracles for the clearance process with a special focus on cross-border, cross-platform and cross-currency transactions. The solution will tokenize the Electronic Bill of Lading (eBoL) and make it easier to obtain supply chain data to enable the paying of exporters while goods are still in transit. This development is to improve the security, speed and efficiency of international trade systems.
Brazil’s DREX Enhances Interoperability
Another crucial part of the pilot will be Chainlink’s CCIP that will enable Brazil’s DREX to operate with foreign CBDCs. This integration is expected to transform cross-border commerce through supporting transactions in a number of currencies and on a number of blockchains. Thus, increasing interoperability, the system is designed to facilitate faster, more secure, and more efficient international trade.
Joao Bruno Grossi, Head of Emerging Technologies at Banco Inter, expressed his enthusiasm for the project’s potential, stating:
“Banco Inter sees Phase 2 of the DREX CBDC project 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.”
The pilot will also demonstrate how blockchain can improve other significant trade finance operations, including DvP and PvP. These mechanisms prevent goods to be delivered before payment is made and only payments are made when both parties are through with their obligations.
Microsoft Powers Brazil’s DREX
Microsoft, which has been a proponent of the technology, will grant cloud services for the DREX project implementation. Aragao, a Microsoft’s Innovation Specialist for Financial Service pointed out that,
“Microsoft is providing technology to support the development of DREX that has been designed to not only broaden access to intelligent financial services but to play a key role in the development of the nation’s economy.”
7COMm will be handling the technical part of the project and Chainlink Labs provide the security needed for the cross-chain integration. As the Global Head of Banking and Capital Markets at Chainlink Labs, Angela Walker explained that CCIP will pave the way for safe and efficient cross-currency and cross-chain transactions that will showcase the real potential of tokenized assets.
As DREX prepares to revolutionize digital currency and trade finance, this partnership marks a new chapter in blockchain-based financial systems. These systems are likely to increase efficiency and prosperity in Brazil’s economy.
