The Bank for International Settlements (BIS) and Central Banks Collaborate on CBDC Test
The Bank for International Settlements (BIS), along with the central banks of France, Singapore, and Switzerland, has successfully completed a new initiative called Project Mariana. This project aimed to test cross-border trading and settlement of wholesale central bank digital currencies (wCBDCs) between financial institutions.
Project Mariana leverages the concepts of Decentralized Finance (DeFi) technology on a public blockchain, potentially revolutionizing the digital currency world. The collaboration involved BIS Innovation Hub centers in Switzerland, Singapore, and the Eurosystem, together with Banque de France, Monetary Authority of Singapore, and Swiss National Bank.
The project successfully validated the trading and settlement of hypothetical euro, Singapore dollar, and Swiss franc wCBDCs. Discussions were held regarding establishing standardized technical tokens and creating bridges to facilitate seamless wCBDC transfers. The consortium also explored the concept of Automated Market Makers (AMM) for automatic pricing and execution of spot FX transactions.
The inclusion of DeFi technology could lead to the development of new financial market infrastructures. However, this is just an experimental phase, and further investigation into CBDC opportunities and obstacles is planned.
Director General for Financial Stability and Operations at Banque de France Emmanuelle Assouan’s Statement
“Mariana is a novel experiment in several aspects. We have developed a practical solution to exchange multi-CBDCs in a global network interoperable with regional platforms on which the CBDC of each jurisdiction is issued. This could be a forerunner for the functioning of cross-border payments in the future.”
Mariana is a significant step towards improving cross-border payments, but tokenization and DeFi technologies are still in their early stages. The project will be featured at the Banque de France conference on Oct. 3.
Building on Last Year’s Success
Last year, BIS collaborated with central banks from Hong Kong SAR, Thailand, mainland China, and the United Arab Emirates to complete a cross-border digital currency pilot called mBridge. This pilot involved around 20 banks conducting 164 payment and foreign exchange transactions over six weeks, with transactions exceeding $22 million settled directly on the mBridge platform.
Project Mariana represents further progress in using blockchain for settlements by the BIS. However, more experiments and trials will continue as the technology evolves.
Hot Take: Project Mariana Paves the Way for Cross-Border CBDC Payments
The successful completion of Project Mariana by the Bank for International Settlements (BIS) and collaborating central banks marks a significant milestone in the development of cross-border central bank digital currency (CBDC) payments. By leveraging Decentralized Finance (DeFi) technology on a public blockchain, this initiative has demonstrated the potential for a new era in digital currency transactions.
The validation of trading and settlement of hypothetical wCBDCs between financial institutions, along with discussions on technical tokens and Automated Market Makers (AMM), showcases the progress made in creating standardized infrastructure for seamless cross-border transfers.
While still experimental, Project Mariana sets the stage for further exploration of CBDC opportunities and challenges. It highlights the need for continued research into tokenization and DeFi technologies to enhance cross-border payments. With ongoing efforts to improve settlements using blockchain technology, the future of CBDC payments looks promising.
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