The Central Bank of Brazil is partnering with Chainlink, Microsoft, and others to develop DREX, a new CBDC. DREX will specialize in cross-border trade rather than everyday use, incorporating artificial intelligence (AI) oracle technology.

Brazil has made several crypto advancements this year, like the world’s first spot Solana ETF.

Brazil’s New DREX CBDC

According to a recent press release from Chainlink, the Central Bank of Brazil (BCB) has selected the company alongside Microsoft Brazil, digital banking firm Banco Inter, and 7COMm to continue developing the country’s new CBDC. The BCB has been working on this new asset, DREX, and is preparing to enter the second phase of testing.

“We look forward to… demonstrating how the adoption of blockchain technology combined with Chainlink’s interoperability protocol CCIP can transform trade finance. Chainlink CCIP… will help showcase what tokenized assets can do at scale for this key CBDC use case in Brazil,” said Angela Walker, Global Head of Banking and Capital Markets at Chainlink.

In essence, DREX’s designers will focus on trade finance, especially cross-border agricultural transactions. DREX, in other words, will incorporate AI supply chain management and blockchain data that would not be relevant to everyday customers. China, another large CBDC user, has also employed specialized products for this use case.

Brazil has made several important strides in crypto adoption this year. For example, it launched the world’s first Solana spot ETF in August, a model for other countries to emulate.

Additionally, the BCB set the ambitious goal of finalizing comprehensive crypto regulations within a year.

DREX will not be the first trade-focused CBDC, but it will have new features. Phase two of DREX development will use Chainlink CCIP to conduct interoperability tests, ensuring that the BCB and foreign banks can conduct transactions smoothly.

It will also experiment with tokenizing Bills of Lading and triggering exporter payments via blockchain. These and other small-scale tests will determine Brazil’s ability to use DREX en masse.

Ultimately, this pilot program will ensure that DREX’s functions are ready for wider use. The press release does not specify plans for the next phase other than a wider use of cross-border payments.

Yet, Brazil has set a very ambitious project with DREX, which might require extensive tests. If successful, however, it would be a major advancement for CBDCs in Latin America.