Brazil and Hong Kong Test Cross-Border Blockchain Trading System with Chainlink

The Brazilian Digital sofa Banco Inter has successfully completed a pilot for international trade finance using blockchain technology in collaboration with chainlink, the Central Bank of Brazil, and the Hong Kong Monetary Authority (HKMA). This pilot demonstrates how distributed ledger technology (DLT) can simplify the complex world of cross-border payments.

During this pilot, part of the second phase of the Drex project—a central bank digital currency (CBDC) initiative—the settlement of export transactions was simulated between Brazil's Drex network and the Ensemble platform in Hong Kong. This platform was developed under the HKMA's Project Ensemble, highlighting the need for interoperability between different blockchain ecosystems. Chainlink provided the necessary infrastructure for this connection.

Banco Inter has collaborated with Chainlink in the past, including earlier pilots of the Drex project. By supporting tokenized payments and automating contract transfers via smart contracts, the platform offers significant cost and risk reduction for small and medium-sized enterprises (SMEs). This opens new doors to international markets, which is crucial for economic growth in today's world.

Traditional trade finance, the system of credit and payment arrangements that enables importers and exporters to facilitate international transactions, remains one of the most complex areas of global trade. The results of this pilot project suggest that such processes can be automated through blockchain technology, contributing to improved synchronization of goods movements, payments, and ownership transfers.

The Design of the Digital Real

Over the past year, the Central Bank of Brazil has accelerated the development of its digital currency initiatives, aiming to create a synthetic digital real that combines programmability, privacy, and decentralization. This move isn't just a technological upgrade—it reflects a broader shift toward digital payments and the growing adoption of stablecoins in the country.

According to Gabriel Galípolo, president of the Central Bank of Brazil, approximately 90% of crypto transactions in the country involve stablecoins. This underscores not only the significant role of stablecoins in Brazil's financial ecosystems but also the potential of the digital real to modernize existing structures. While Drex is often presented as a CBDC, Galípolo previously described it as an infrastructure project aimed at increasing credit access and modernizing the country's financial system.

Brazil's progress with its digital euro serves as an example for other countries seeking to innovate and improve their financial systems. Investors and analysts should monitor developments surrounding the digital real and its implications for the broader crypto market and traditional financial flows.

Frequently Asked Questions

What are the key benefits of blockchain technology in trade finance?
Blockchain technology can reduce costs, mitigate risks and enable process automation, which is essential for small and medium-sized businesses that want to operate internationally.

How does the digital real compare to existing stablecoins?
The digital real should serve as an infrastructure project that increases programmability and access to credit, while also fitting within the broader context of stablecoin adoption in Brazil.

Why is it important that the Central Bank of Brazil is taking these initiatives?
By developing a digital currency, the central bank can ignite financial modernization in Brazil, improve credit access for citizens, and respond to the growing demand for digital payments.