Central Bank of Brazil expands Drex CBDC pilot with new use cases

The Central Bank of Brazil has unveiled 13 new use cases for the second phase of its Drex central bank digital currency (CBDC) pilot.

These use cases were selected from 46 proposals submitted by 16 consortiums, reflecting a diverse range of functionalities to automate various government service processes and enhance financial transactions.

The selected use cases cover multiple applications, including platforms for tokenising real estate, creating liquidity pools for trading public securities, assigning credits with collateralisation, financing international trade, and automating car transactions.

This phase of the pilot aims to explore how these new functionalities can work within the Drex blockchain environment while ensuring user privacy and security.

Among the organisations participating in this new phase are some of Brazil's leading financial institutions, such as Mercado Bitcoin, Brazil’s stock exchange B3, Santander, Tecban, XP-Visa, Banco do Brazil, Bradesco, Itau, Banco Inter, Nubank, and the Brazilian Association of Banks.

These institutions will collaborate to test the effectiveness and performance of the new use cases, helping to determine their feasibility in the Drex ecosystem.

Bruno Grossi, the manager of emerging technologies at Banco Inter, explained that while testing these new functionalities, participants must also ensure that they meet privacy requirements to protect user data and maintain banking secrecy.

“Each of the use cases will be tested by everyone. Collaboration will always be welcome,” Grossi noted, highlighting the cooperative approach of the pilot.

The second phase comes after the Central Bank of Brazil postponed the completion of the pilot to 2025 due to inefficiencies in privacy solutions trialed earlier this year.

In May, the bank noted that the tested solutions lacked "necessary maturity to guarantee compliance with all requirements and legal issues related to the preservation of citizens’ privacy."

This new phase is designed to address these issues by allowing a broader range of participants to experiment with the approved use cases, aiming for more robust and compliant solutions.

The Drex CBDC pilot continues to evolve as the Central Bank of Brazil explores innovative ways to integrate digital currency into the country's financial system, prioritizing both technological advancements and regulatory compliance.