Running from October 14 to November 29, the Central Bank of Brazil is soliciting applications for the second round of its Drex central bank digital currency (CBDC) pilot program. < This phase seeks to investigate creative business cases, especially those fit for smart contract implementation. Although Drex’s exact debut date is currently unknown, project coordinator Fábio Araújo said that live testing might follow this trial.
Based on its statement, the central bank will review limitless proposals. Given the General Data Protection Law of Brazil, especially, we expect the new business cases to give privacy solutions top priority. They have to additionally handle any legal obstacles that can impede execution.
So far, this phase has proven 13 use cases encompassing various applications like international trade financing, CBDC collateralization, receivables assignment, and foreign currency market optimizations. This phase will also center tokenization and distributed finance (DeFi), which calls for Drex system interaction with other networks.
Interoperability will be very vital as the central bank plans Drex to replace Brazil’s current real-time gross settlement system. Arajo said that more information is needed to verify the operational readiness of the new system, which will basically be an improved form of the former model called STR 2.0.
Participating in the first phase of the Drex pilot were sixteen consortia mostly under the direction of banks. First showing interest in the digital real in 2015, Brazilians did not start serious testing until 2022. Successful integration of strong privacy solutions will be a deciding element for the future deployment of Drex to the larger public as the central bank strives to improve its plans and capacities.
