The Bank for International Settlements (BIS) and the central banks of Singapore, France and Switzerland successfully tested the cross-border trading and settlement of wholesale central bank digital currencies (wCBDCs) between financial institutions.
Dubbed Project Mariana, the project uses new decentralized finance (DeFi) technology concepts on a public blockchain and was developed jointly by three BIS Innovation Hub centres (the Swiss, Singapore and Eurosystem Hub Centres) together with the Bank of France, the Monetary Authority of Singapore (MAS), and the Swiss National Bank.
The project’s proof of concept successfully tested the cross-border trading and settlement of hypothetical euro, Singapore dollar and Swiss franc wCBDCs between simulated financial institutions.
The process relied on three elements: a common technical token standard provided by a public blockchain to facilitate exchange and interoperability between the different currencies; bridges for the seamless transfer of wCBDCs between different networks; and an Automated Market Maker (AMM), which is a specific type of decentralized exchange to trade and settle spot FX transactions automatically.
For Project Mariana, the AMM pooled the liquidity of the hypothetical euro, Singapore dollar and Swiss franc wCBDCs, with innovative algorithms enabling spot FX transactions to be priced and executed automatically and settled immediately.
These protocols could be used by the next generation of financial market infrastructures facilitating cross-border trading and settlement between financial institutions.
Sopnendu Mohanty, chief fintech officer at MAS, says: “This collaboration across Singapore, Switzerland and France has demonstrated the potential of open and interoperable networks. In addition, this collaboration enables central banks to explore and better understand the policy, governance and technical implications of using automated market markers to facilitate foreign exchange.”
The Project Mariana participants stressed that this latest BIS Innovation Hub exercise is purely experimental and does not indicate that any of the partner central banks intend to issue wCBDC or endorse DeFi or a particular technological solution.