The Bank for International Settlements (BIS) and the central banks of France, Singapore, and Switzerland just recently announced the successful completion of a new CBDC initiative called Project Mariana.
Recently, a groundbreaking initiative known as Project Mariana saw the Bank for International Settlements (BIS) collaborating with central banks from France, Singapore, and Switzerland.
Their joint effort resulted in the successful testing of cross-border trading and settlement involving wholesale central bank digital currencies (wCBDCs) among financial institutions.
This development could potentially mark a significant advancement in the world of digital currencies.
Notably, Project Mariana harnessed the principles of Decentralized Finance (DeFi) technology, applying them to a public blockchain infrastructure. This innovative approach could usher in a new era for digital currencies.
The collaborative effort involved BIS Innovation Hub centres in Switzerland, Singapore, and the Eurosystem, in conjunction with key institutions such as Banque de France, the Monetary Authority of Singapore, and the Swiss National Bank.
Together, they validated the trading and settlement processes for hypothetical CBDCs denominated in euros, Singapore dollars, and Swiss francs.
Throughout the project, discussions centred on critical aspects of the initiative, including the establishment of standardized technical tokens and the development of bridges to facilitate seamless CBDC transfers.
Additionally, the consortium of central banks explored the concept of an Automated Market Maker (AMM), which enables the automatic pricing and execution of spot foreign exchange (FX) transactions.
Overall, Project Mariana represents a significant step forward in the exploration of central bank digital currencies and their potential application in cross-border trading and settlement, with the incorporation of DeFi principles adding an extra layer of innovation to the endeavour.
The incorporation of DeFi technology, including automated market makers, has the potential to usher in a new era of financial market infrastructure.
Project Mariana's design effectively balances the domestic oversight requirements of central banks with the interests of financial institutions seeking efficient cross-border holding, transfer, and settlement capabilities for wholesale central bank digital currencies (CBDC).
The Bank for International Settlements (BIS) plans to conduct further investigations into the possibilities and challenges associated with central bank digital currencies (CBDCs) and their associated technologies, in close collaboration with its partners.
Additionally, partner central banks will need to express their intention to issue CBDC or support the use of DeFi technologies as part of this ongoing exploration.
Emmanuelle Assouan, the Director General for Financial Stability and Operations at Banque de France, shared her thoughts on these developments, stating:
“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.”
Although there has been notable advancement, it's important to recognize that tokenization and DeFi technologies are still in their early stages, and additional research is necessary.
Project Mariana is a pivotal initiative aimed at enhancing cross-border payment systems, and it is expected to take centre stage at the Banque de France conference scheduled for October 3rd.
Notably, just last year, the Bank for International Settlements (BIS) joined forces with various central banks, including those from Hong Kong SAR, Thailand, mainland China, and the United Arab Emirates, to successfully conduct a pilot program focused on cross-border digital currencies.