The Central Bank of Brazil is accepting applications for phase 2 of its Drex central bank digital currency (CBDC) pilot project between Oct. 14 and Nov. 29. It is interested in business cases that can be implemented by smart contract in particular.
Although there is no launch date for the Drex, the Drex coordinator at the Central Bank Fábio Araújo hinted that the bank is eyeing live tests after this pilot round, Cointelegraph Brasil reported.
Focus on privacy and interoperability
The central bank stated in its call for applicants that there is no limit on the number of projects its Executive Management Committee will consider.
The new business cases should highlight a privacy solution, especially in regard to the Brazilian General Data Protection Law, and they should address the existing and potential legal impediments to implementation.
Thirteen cases have been confirmed so far in the second phase of the pilot. According to a press report, the new use cases include the assignment of receivables, collateralization with CBDC, international trade finance, foreign exchange market optimization, a liquidity pool for public bonds and negotiations involving automobiles, carbon, debentures and real estate.
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Tokenization and decentralized finance (DeFi) will also be in focus in this round of testing. Drex’s interaction with other networks needs to be tested as well. The Comissão de Valores Mobiliários, the country’s securities regulator, intended to create a tokenization sandbox this year. Araújo said:
“We will probably adopt as many internal elements as possible into the system and will interoperate only [when] strictly necessary.”
Development is speeding up
Interoperability will probably be a big requirement in any case, as Drex is intended to replace the Sistema de Transferência de Reservas (STR), Brazil’s real-time gross settlement system. Araújo also said:
“DREX as it is designed will be the STR 2.0. This was already designed in the first phase of the project. We need more details to begin operation."
Sixteen consortia, mostly led by banks, took part in the first phase of testing. The Brazilian Association of Banks was instrumental in forming some of those consortia after 13 of its 118 members expressed interest in participating.
Although a digital real was first proposed in Brazil in 2015, testing only began in 2022.
Source: Augusto Simões
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