BCB partners with innovators for DREX trade finance pilot

This initiative aims to showcase blockchain's potential in automating supply chain management and improving trade finance processes.

The project centres on leveraging blockchain technology and oracles to facilitate the automated settlement of agricultural commodity transactions across borders, platforms, and currencies. Chainlink’s Cross-Chain Interoperability Protocol (CCIP) will play a key role by ensuring simple interoperability between Brazil's DREX and a foreign central bank's digital currency, enabling efficient and secure cross-border transactions.

Key features of the DREX digital currency pilot

• Tokenized documentation: the pilot will include tokenizing an Electronic Bill of Lading (eBoL) on-chain;

• Automated payment triggers: supply chain data will initiate payments to exporters throughout the shipping process;

• Innovative settlement mechanisms: the solution aims to implement Delivery versus Payment (DvP) and Payment versus Payment (PvP) models, simplifying trade processes while improving security and transparency.
  
  

Technological and economic impact

Chainlink CCIP is designed to improve liquidity and expand market reach by enabling smooth token transfers across multiple blockchain networks. The protocol’s ability to integrate with existing backend systems offers scalability for Central Bank Digital Currencies (CBDCs) and tokenized assets.

Banco Inter will oversee the implementation of DREX in Brazil, while Microsoft provides cloud services to support blockchain infrastructure. Meanwhile, 7COMm will focus on the project's technical delivery, improving digital transformation efforts within the financial sector.

This collaboration underscores the potential of blockchain technology to modernise trade finance, simplify cross-border transactions, and support the growth of Brazil’s economy by introducing secure, efficient, and transparent solutions for international trade.

Blockchain cuts trade finance gaps and boosts efficiency

Blockchain technology addresses critical inefficiencies in traditional trade finance by offering secure, transparent, and automated solutions. According to a Deloitte report, trade finance gaps exceeded USD 1.7 trillion in 2024, driven by slow processes, reliance on paper documentation, and credit access disparities. Blockchain reduces these gaps by digitising trade documents, ensuring immutability, and enabling real-time tracking of transactions, which minimises fraud and errors. A Bain&Company report found that blockchain-powered trade finance could cut transaction processing times by up to 80%, while automation through smart contracts further mitigates payment and counterparty risks. In cross-border contexts, blockchain's decentralized nature allows simple multi-currency settlements, offering exporters and importers faster, cheaper, and more secure alternatives to legacy systems.