• Home
  • Blockchain
  • Successful Cross-Border CBDC Test Conducted by BIS and Central Banks of France, Singapore, and Switzerland through DeFi
Successful Cross-Border CBDC Test Conducted by BIS and Central Banks of France, Singapore, and Switzerland through DeFi

Successful Cross-Border CBDC Test Conducted by BIS and Central Banks of France, Singapore, and Switzerland through DeFi

Successful Test of Cross-Border Trading and Settlement for Wholesale CBDCs

The Bank for International Settlements (BIS) and central banks of France, Singapore, and Switzerland have announced the successful test of cross-border trading and settlement for wholesale central bank digital currencies (wCBDCs). This test utilized decentralized finance (DeFi) technology concepts and was conducted on a public blockchain.

Project Mariana: Testing Cross-Border Trading with CBDCs

Project Mariana, a collaboration between BIS Innovation Hub centers in Switzerland, Singapore, and Eurosystem, along with the Bank of France, Monetary Authority of Singapore, and Swiss National Bank, showcased the feasibility of cross-border trading and settlement involving hypothetical euro, Singapore dollar, and Swiss franc wCBDCs among simulated financial institutions.

The project’s success relied on three key elements:

  1. Common Technical Token Standard: A standardized token provided by a public blockchain to facilitate interoperability and exchange between different currencies.
  2. Bridges for Seamless Transfer: Mechanisms enabling frictionless transfer of wCBDCs across various networks.
  3. Automated Market Maker (AMM): A specialized decentralized exchange that enables automatic pricing, execution, and immediate settlement of spot FX transactions.

The AMM effectively pooled liquidity from the hypothetical euro, Singapore dollar, and Swiss franc wCBDCs using innovative algorithms to automatically price and execute spot FX transactions.

This project aimed to explore next-generation financial market infrastructures designed to streamline cross-border trading and settlement processes among financial institutions.

Leveraging Public Blockchain for Seamless Exchange

The project leveraged a common token standard on a public blockchain, allowing for seamless exchange and interoperability across diverse local payment and settlement systems maintained by participating central banks. This approach provides insights into incorporating an international dimension into ongoing wCBDC design explorations.

While Project Mariana represents a significant step forward, it is important to acknowledge that tokenization and DeFi technologies are still in their early stages. Cecilia Skingsley, Head of the BIS Innovation Hub, commented, “Project Mariana pioneers the use of novel technology for interbank foreign exchange markets. It successfully demonstrated that it is feasible to exchange wholesale CBDC across borders using novel concepts such as automated market makers.”

Hot Take: Embracing Innovation for Cross-Border CBDC Trading

The successful test of cross-border trading and settlement for wholesale CBDCs through Project Mariana highlights the potential of decentralized finance technology and public blockchains in revolutionizing the financial industry. By leveraging standardized tokens, seamless transfer mechanisms, and automated market makers, this project showcases the future possibilities for streamlining cross-border transactions among financial institutions. While still in its early stages, the findings from Project Mariana provide valuable insights for further exploration and development of next-generation financial market infrastructures. As the world continues to embrace digital currencies, initiatives like Project Mariana pave the way for a more efficient and interconnected global financial system.

Read Disclaimer
This content is aimed at sharing knowledge, it's not a direct proposal to transact, nor a prompt to engage in offers. Lolacoin.org doesn't provide expert advice regarding finance, tax, or legal matters. Caveat emptor applies when you utilize any products, services, or materials described in this post. In every interpretation of the law, either directly or by virtue of any negligence, neither our team nor the poster bears responsibility for any detriment or loss resulting. Dive into the details on Critical Disclaimers and Risk Disclosures.

Share it

Successful Cross-Border CBDC Test Conducted by BIS and Central Banks of France, Singapore, and Switzerland through DeFi