BIS and central banks make waves with successful CBDC testing in Project Mariana

The Bank for International Settlements (BIS) and the central banks of France, Singapore and Switzerland recently announced the successful completion of a new CBCC initiative called Project Mariana.

This project examines cross-border transactions and the settlement of wholesale central bank digital currencies (wCBDCs) between financial institutions.

BIS and central banks cooperate on the CBCC test

According to reports, the novel project uses decentralized finance (DeFi) technology on a public blockchain, possibly bringing a new dawn in the world of digital currency.

This new collaboration between the BIS Innovation Hub in Switzerland, Singapore and the Eurosystem, together with the Banque de France, the Monetary Authority of Singapore and the Swiss National Bank, has successfully ensured the trading and settlement of the Euro, Singapore Dollar and Swiss Franc. wCBDCs

During the process, discussions were held on critical issues such as establishing a standardized technical token and creating bridges to facilitate seamless wCBDC transfers. In addition, a consortium of central banks has delved into the Automated Market Maker (AMM) concept, enabling automated pricing and execution of spot FX transactions.

The incorporation of DeFi technology, like automated market makers, could pave the way for a new generation of financial market infrastructure. Project Mariana's architecture balances the need for domestic supervision of central banks and the need for financial institutions to efficiently hold, transfer and settle WCBDC across borders.

However, according to reports, this is only an experimental phase. BIS intends to work with its partners to further explore the opportunities and barriers associated with CBCC and its associated technologies. Partner central banks should demonstrate their willingness to provide wCBDC or support DeFi when engaging with prominent banking counterparts.

Commenting on these developments, Emmanuel Assouane, Director General of Financial Stability and Operations at Banque de France:

“Marianna is a fictional experiment in many ways. We have developed a practical solution for the exchange of multi-CBCCs in a global network in cooperation with regional platforms where CBDCs provide each authority. This could be a precursor to cross-border payments in the future.

Despite progress, tokenization and DeFi technologies are still in their infancy, and more research is needed. Mariana is a cornerstone of reforming cross-border payments and will be at the Banque de France conference on October 3.

Building on last year's success

Just last year, the BIS partnered with several central banks from Hong Kong SAR, Thailand, mainland China and the United Arab Emirates to complete a cross-border digital currency pilot.

According to reports, Embridge processed 164 payment and foreign exchange transactions in six weeks, involving nearly 20 banks, and more than $22 million in transactions were verified directly on the Embridge platform.

This year's participation in the CBCC challenge marks further steps for BIS-based communities to use blockchain. However, based on the documents, further tests and trials will continue.