Brazil tests DeFi elements, compatibility in Drex CBDC pilot
Brazil is incorporating decentralized finance (DeFi) principles into ongoing attempts to develop its in-house “artificial” central bank digital currency (CBDC), formerly known as the Digital Brazilian Real.
On October 3, Banco Central do Brasil President Roberto Campos suggested that Neto needs a multifaceted CBDC that addresses the country's “trilemma” of decentralization, privacy and programmability — challenges that traditional markets have struggled to address simultaneously.
NATO in a presentation to the Marcus Academy on the future of financial intermediation:
“We want to have three types of benefits that you can't find in a conventional CBCC. We want to bring the concept of tokenization into banks' balance sheets.
The result of the integration of the open finance platform and CBCC
Alongside the CBCC development, Brazil plans to accelerate its nationwide tokenization efforts through an open finance platform. Brazil's central bank envisions open finance as a marketplace that offers consumers multiple options for banking and payments, including CBCCs.
Brazilian Open Finance Platform User Interface. Source: Banco Central do Brasil
According to the document cited by NATO, the marketplace promotes “competition by channel and subject matter.”
Through Drakes, Brazil aims to introduce the concept of tokenization to banks and bring the DeFi ecosystem into the regulatory perimeter.
Brazil's CBCC aims to solve the problem of decentralization, privacy and programming. Source: Banco Central do Brasil
Working towards CBDC compatibility with DeFi ecosystems
In the first phase of the CBCC pilot, Brazil tested decentralized bodies. The ongoing second phase will focus on digital asset transactions, including cash transfers for government bonds and international trade finance.
The second phase is expected to extend until 2025, with no specific time frame.
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In addition to government efforts, private crypto companies continue to expand digital asset payment options for Brazilians.
On October 3, blockchain payment network Ripple announced a partnership with Brazilian Bitcoin exchange Mercado to launch cross-border crypto payments.
With the new payment tool, businesses in Brazil can make “fast, cheap, efficient cross-border payments” globally 24/7 and settle payments in minutes, Ripple said.
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