- Banco Central do Brasil is narrowing the focus of its DREX digital currency project.
- The project will shift from exploring blockchain towards enabling asset-based lending using Brazil’s PIX payment system.
- Technical issues with privacy and Ethereum-based systems caused delays and led to the refocus.
- Some blockchain-related research will continue, but main plans will not use decentralization or tokenization technologies.
- The updated project aims to let brokers allow clients to use stocks, bonds, and other assets as loan collateral.
The Banco Central do Brasil has decided to narrow the scope of its DREX project, originally intended as a wholesale central bank digital currency (wCBDC) initiative. The new focus will be on allowing brokers to help clients use assets—such as stocks and bonds—as collateral for loans, and will operate through Brazil’s PIX instant payment system instead of blockchain.
During a recent presentation at Blockchain Rio, the central bank’s governor Gabriel Gallipolo shared that this next phase of DREX will no longer highlight blockchain, tokenization, or CBDC as central components. According to the presentation, the project will become a “lien reconciliation” effort, streamlining how assets can back loans.
The decision comes after the central bank faced technical obstacles in combining advanced privacy solutions with Ethereum-based Hyperledger Besu technology. The first stage of DREX tested uses for wholesale CBDC, tokenized deposits, and digital treasury bonds—public debt instruments managed through smart contracts. Sixteen consortia participated in these trials, but as the article notes, “privacy solutions remain immature.”
While blockchain solutions will continue to be explored in the background, the immediate plans will focus on directly integrating with the existing PIX payment platform. Open finance remains a goal, but the main operational system will not use decentralization techniques.
The previous work on DREX included only a limited set of assets and functions, concentrating mainly on government bonds and digital transfers among institutions. The central bank cited both slow progress and concerns about the security of privacy tools as factors for the change in strategy.
For now, the project will operate with a limited set of partners and asset types as it moves forward under its new, more targeted approach. Some related research and testing with blockchain will carry on behind the scenes. Full details are available for Pro subscribers.
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