New York, Monday, September 09,2024- Brazil’s central bank announced that it had selected Visa and Santander, among others, to participate in the second phase of its digital currency pilot, known as Drex. Drex is the name given to Brazil’s Central Bank Digital Currency (CBDC) pilot project.
The central bank announced the decision Friday, saying the companies were chosen from 42 proposals. The second phase will focus on using smart contracts to improve financial services.
Visa, in partnership with XP and Nubank, will explore streamlining cross-border transactions using the Drex infrastructure.
Santander will investigate applications in automobile transactions and contribute to projects on credit transactions and decarbonization.
The pilot includes 16 consortia of companies working on essential resources for the CBDC’s operation.
The central bank will oversee 11 themes, while the Securities and Exchange Commission will supervise two.
Themes range from credit transactions and trade finance to real estate and agribusiness asset transactions. Notable participants include Bank of Brazil, Bradesco, and Itaú for credit collateralization, and BB, Caixa, and SFCoop for real estate transactions.
The Brazilian central bank plans to open a new call for applications in the third quarter of 2024, inviting entities to join the Drex pilot.
Selected participants must test smart contract implementations by mid-2025. This phase aims to refine governance models and integrate CBDCs into Brazil’s financial system.
Earlier this year, Brazil’s central bank also announced plans to regulate crypto and virtual asset service providers.
The outcomes of the Drex pilot will likely influence Brazil’s approach to digital finance and financial inclusion.
Drex is a government-backed digital currency that is being tested and developed by the Central Bank of Brazil. The goal of the Drex pilot is to explore the potential benefits and challenges of using a CBDC in Brazil’s financial system.
