Exploring CBDC Applications with Visa and Santander
The Central Bank of Brazil has selected 13 themes for the second phase of its CBDC pilot, Drex. This phase will focus on testing financial services through smart contracts managed by third-party participants. From a pool of 42 proposals, the BCB and the Securities and Exchange Commission have chosen themes covering various financial services, including optimizing the foreign exchange market and automobile transactions. Major global players like Visa and Santander will be actively involved in this phase, showcasing the international significance of the pilot.
Visa and Santander Amongst Other Key Participants and Projects
Visa and Santander are key players in the second phase of the Drex pilot, along with other major participants. These companies will test and develop crucial resources for the platform and explore different aspects of CBDC applications:
- Visa, in collaboration with XP and Nubank, will focus on optimizing the foreign exchange market.
- Santander will delve into CBDC applications in automobile transactions, credit transactions, and decarbonization projects.
The 13 selected themes are divided between the BCB and the CVM, with the central bank overseeing 11 and the securities regulator supervising two. These themes cover a wide range of financial applications, from credit transactions to real estate and agribusiness asset transactions. The involvement of major banks and consortia in these themes demonstrates the breadth of the pilot’s scope.
CBDC Brazil: Applications To Be Opened Again In Q3 2024
As the Drex pilot progresses into its second phase, the focus will be on refining privacy solutions and implementing financial services through smart contracts. Each theme will operate in dedicated environments for collaborative refinement of governance models and integration strategies. In the third quarter of 2024, the BCB will open applications for entities interested in joining the pilot to test smart contract implementation by mid-2025.
“During the third quarter of 2024, the BCB will open a call for new application proposals from entities interested in participating in the Drex Pilot. Those selected must test the implementation of smart contracts by the end of the first half of 2025.”
This move aims to enhance participation and validate the full implementation of smart contracts by mid-2025. The collaboration between the BCB, industry players, and regulatory bodies emphasizes the commitment to digital transformation and financial inclusion in Brazil.
Anticipating Brazil’s Digital Finance Evolution
The second phase of the Drex pilot represents a significant step towards realizing the potential of digital currencies for financial inclusion and operational efficiency in Brazil. The outcomes of these tests will likely set the foundation for digital finance in the country, marking a pivotal moment in its digital transformation journey.
Earlier this year, Brazil announced regulations for Crypto and virtual asset service providers as a precursor to wider Crypto adoption in the country. The regulatory proposals are expected to be finalized by the end of the year, paving the way for significant developments anticipated later this year.
Hot Take: Embracing CBDC Innovation in Brazil
As Brazil progresses through the second phase of the Drex pilot, the collaboration with key stakeholders and international players like Visa and Santander sets the stage for transformative CBDC applications. By prioritizing financial inclusion and efficiency, Brazil is positioning itself at the forefront of digital finance innovation.
Source: Brazil Central Bank
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