The Banco Central do Brasil (BCB) recently released a list of the thirteen themes selected for the second phase of the Drex Pilot, the Brazilian Digital Real.
The Executive Management Committee (CEG) reportedly selecte the subjects from 42 different proposals that had been submitted.
A description of the themes and their developers has now been released.
Discounting of receivables: ABC and Inter
In this case, Distributed Ledger Technology (DLT) facilitates the movement of amounts that companies are entitled to receive for transactions made between the commercial establishment and its “credit card suppliers – credit card receivables.”
This instrument makes it easier for small businesses to obtain credit by reducing costs or “providing flexibility in managing their receivables portfolio.”
Credit collateralized by term deposits: BB, Bradesco, and Itaú
In working capital operations, companies turn to the financial sector to borrow money and “meet the short-term cash needs of their business.”
Using Bank Deposit Certificates (CDBs) as collateral in these operations reduces the “loan cost and preserves the investment’s profitability.”
This instrument can be important for “small and large companies to manage their finances.”
Credit collateralized by government bonds: ABBC, ABC, and MB
Like the previous model, with the potential popularization of government bonds by people as a savings instrument, this use case could “reduce the cost of consumer loans for the population.”
Using the savings as collateral for the loan, citizens could “obtain substantial reductions in the operation costs while continuing to hold their savings without losing income.”
Financing international trade operations (Trade Finance): Inter
This trade finance solution can be applied to goods, such as agricultural commodities, on “a programmable platform with the tokenization of the goods’ shipping document, allowing them to be paid in installments swiftly.”
Via interoperability between Drex and a Central Bank Digital Currency (CBDC) platform from another country, the use case simplifies and reduces the cost of accessing the “global market and fosters innovation in international trade.”
Optimizing the foreign exchange market: XP-Visa and NuBank
The proposal enhances the efficiency, transparency, as well as “risk controls of exchanging real and other sovereign currencies.”
By enabling trading 24 hours a day, seven days a week, it presents an opportunity to “reduce costs through flow optimizations.”
At the same time, the tokenization of foreign exchange contracts will make it possible to record and guarantee compliance “with all the rules and conditions of the foreign currency purchase and sale transaction.”
Liquidity pool for trading government bonds: ABC, Inter, and MB
Inspired by the decentralized finance ecosystem, the use case proposes the creation of an infrastructure for “buying and selling federal government bonds.”
In this solution, the negotiation, registration, settlement, reconciliation, and custody processes are carried out through smart contracts and executed automatically, “simplifying the population’s access to this investment opportunity and speeding up the use of government bonds in other operations.”
Transactions with Bank Credit Notes (CCB): ABBC, and Transactions with debentures: B3, BTG and Santander
These use cases that deal with debt instruments, specifically CCBs and debentures, allow them to be “traded and settled in a simplified, automatic, and cost-effective way.”
Both CCBs and debentures are widely traded assets and are “common in the operations of most financial institutions.”
Their inclusion in Drex will make it easier to trade these assets and allow companies to access these types of financing.
Transactions with agribusiness assets: TecBan, MB, and XP-Visa, and Transactions with decarbonization credits (CBIO): Santander
Given Brazil’s characteristics, sustainable agribusiness financing and green finance are “paramount.”
The proposed use cases aim to improve these assets’ negotiation and pricing mechanisms, providing the “necessary guarantees for investing in sustainable, high-productivity projects.”
Transactions with automobiles: B3, BV, and Santander, and Transactions with real assets: BB, Caixa, and SFCoop
Real assets transactions are one of the DLT application categories that have the most “significant appeal” for the population precisely because they help solve the problem of transferring “high-value property,” like a home or a car – an issue that we usually encounter at least once in life.
The Drex platform will now aim to eliminate risks which are “inherent” to these transactions and make them simpler and more accessible.
Transactions with assets on public networks: MB Public DLT networks are an essential source of innovation for the “digital and tokenized assets environment.”
New business models and new opportunities for financial market participants often “present themselves in these environments.”
The use case proposes connecting the Drex platform to these environments, allowing discussions on the “best way to design” a robust regulatory framework that allows such innovations to “reach the population safely.”
Usability
This second phase will test the implementation of financial services made available through smart contracts “created and managed by third parties participating in the platform.”
Participants
The Drex Pilot involves various consortia or companies, all engaged in testing and developing the resources needed to operate the platform.
They are as follows:
- ABBC: Banco Brasileiro de Crédito, Banco Ribeirão Preto, Banco Original, Banco ABC Brasil, Banco BS2 and Banco Seguro, ABBC, BBChain, Microsoft, and BIP;
- ABC: Banco ABC, Hamsa, LoopiPay, and Google;
- B3: Banco B3, B3, and B3 Digitas;
- BB: Banco do Brasil;
- Bradesco: Bradesco, Nuclea, and Setl;
- BTG: Banco BTG;
- BV: Banco BV;
- Caixa: Caixa, Elo, and Microsoft;
- Inter: Banco Inter, Microsoft, and 7Comm;
- Itaú: Itaú Unibanco;
- MB: MBPay, Cerc, Sinqia, Mastercard, and Banco Genial;
- Nubank: NuBank;
- Santander: Santander, Santander Asset Management, F1RST and Toro CTVM;
- SFCoop: Ailos, Cresol, Sicoob, Sicredi, and Unicred;
- TecBan: Basa, TecBan, Pinbank, Dinamo, Cresol, Banco Arbi, Ntokens, Clear Sale, Foxbit, CPqD, AWS, and Parfin;
- XP-Visa: XP and Visa.
Additional participants
Also, in 2024, the BCB Bank will receive new applications from entities interested in participating in the Drex Pilot.
As noted in the extensive update, those that that are selected will have to test the implementation of smart contracts by the end of the first half of 2025.