Brazil’s CBDC Pilot Project Moves to New Stage

Banco Central do Brasil (BCB) announced that the digital real (CBDC) pilot project, known as Drex, entered a new phase. Participants include 16 consortiums and large financial companies. The second phase will focus on optimizing the foreign exchange market, testing smart contracts, and introducing innovative financial services.

Banco Central do Brasil (BCB) announced that Drex, the digital real pilot project, entered its second phase. Together with the local Securities and Exchange Commission (CVM), 16 consortiums and large financial companies were selected to test the CBDC and develop resources in 13 selected areas of the project’s development.

The second phase aims to develop the infrastructure needed to integrate smart contracts and deliver innovative financial services. Participants will explore opportunities for Drex to enhance existing financial market operations.

Participants in the second phase of the Drex pilot include:

• payment giants Visa and Mastercard;
• XP Investimentos, one of the biggest investment platforms, and Nubank, a neobank from Brazil;
• Banco Santander, the largest financial and credit group in Spain, and Itaú Unibanco, the major bank in Latin America;
• Banco Bradesco and BTG Pactual, Brazil’s leading investment banks;
• São Paulo Stock Exchange (B3), the largest stock exchange in Latin America;
• The Brazilian Federation of Banks (FEBRABAN);
• Brazil’s state-owned banks, Banco do Brasil and Caixa Econômica Federal (CEF);
• local crypto exchange Mercado Bitcoin;
• PagSeguro, TecBan, and Stone, local providers of tech solutions for electronic payments and money automation.

Of the 42 use cases proposed for Drex, 13 are selected as part of the new phase of the digital real testing, with BCB focusing on testing the adoption of financial services via smart contracts developed and managed by third parties. Visa will work with XP Investimentos and Nubank to optimize the foreign exchange market, while Banco Santander will lead projects related to the operation of the automotive market and decarbonization. The Brazilian SEC (CVM) will be responsible for two digital securities projects. The pilot will also explore the use of CBDCs for collateralized loans, financing of foreign trade transactions, bank credit note transactions, and real estate transactions.

The second phase will last until the end of 2024. In early 2025, BCB plans to recruit a new group of companies and corporations to directly develop smart contracts for Drex.

The Brazilian authorities first announced the release of the CBDC in 2022. The first stage of the Drex pilot project began in 2023, when the digital currency received its official name.