- Project Mariana, a BIS Innovation Hub collaboration, concludes wCBDC cross-border trading test based on DeFi and public blockchain.
- It introduces an AMM and wCBDCs for interbank spot FX market proof of concept.
- The project explores tokenization’s potential for seamless currency exchange and cross-network wCBDC transfers.
Project Mariana, a collaborative effort involving the BIS Innovation Hub centers in Switzerland, Singapore, and the Eurosystem has now been concluded for cross-border trading test and settlement of wholesale central bank digital currencies (wCBDCs). The testing was based on DeFi technology concepts on a public blockchain. The Bank for International Settlements (BIS) and the central banks of France, Singapore, and Switzerland have now successfully concluded Project Mariana. Let’s find out more about this latest project and the key collaborations involved.
The project involves BIS Innovation Hub centers along with the Bank of France, the Monetary Authority of Singapore, and the Swiss National Bank. Its goal is to serve as a proof of concept (PoC) for a global interbank spot FX market. Through this PoC, both an Automated Market Maker (AMM) and wholesale Central Bank Digital Currencies (wCBDCs) will be introduced.
Project Mariana builds upon prior experiments that explored cross-border settlement using wCBDC arrangements and distributed ledger technology. It effectively showcases the technical feasibility of the proposed architecture and offers fresh insights into the potential of tokenization across three distinct dimensions.
These dimensions are as follows;
- A widely accepted technical token format offered by a public blockchain, enabling smooth currency exchange and compatibility.
- Mechanisms for effortless wCBDC transfers across various networks.
- The Automated Market Maker (AMM) is a specialized decentralized exchange automating spot FX transactions’ trading and settlement.
In Project Mariana, the AMM leveraged innovative algorithms to combine liquidity from hypothetical euro, Singapore dollar, and Swiss franc wCBDCs. This allowed automatic pricing and immediate execution of spot FX transactions. These protocols hold promise for the next generation of financial market infrastructures, facilitating cross-border trading and settlement among financial institutions.
It is also important to note here that the architecture of this project strikes a balance between the domestic oversight needs of central banks. It also facilitates financial institutions and their desire for efficient wCBDC holding, transfer, and cross-border settlement.
Achieved through a common token standard on a public blockchain, the project fosters interoperability and frictionless wCBDC exchange across diverse local payment and settlement systems managed by participant central banks. Mariana thus presents potential approaches to incorporating an international dimension into ongoing wCBDC design explorations.
So, as the nascent nature of tokenization and DeFi technologies continues to evolve, further research and experimentation remain imperative. The BIS Innovation Hub and its global collaborators have pledged to explore the benefits and challenges of these technologies through relevant use cases. Let’s see what they find out next.