- BIS joins hands with France, Singapore, and Switzerland’s central banks, testing cross-border trading of CBDCs via Project Mariana.
- The use of DeFi technology concepts on a public blockchain facilitated the trial, but the project remains experimental with no immediate intent of CBDC issuance.
Delving into DeFi: Project Mariana’s Endeavors
In a groundbreaking move, the Bank for International Settlements (BIS) – an entity renowned for its deep involvement in global financial stability – collaborated with the central banks of France, Singapore, and Switzerland to trial cross-border trading and settlement mechanisms for wholesale central bank digital currencies (CBDCs). Aptly named Project Mariana, this initiative represents a confluence of blockchain expertise from key global financial institutions.
Harnessing Decentralized Finance Concepts
Project Mariana’s framework wasn’t just ambitious; it was a herald of the confluence between conventional banking and emergent blockchain technologies. Orchestrated by the Banque de France, Monetary Authority of Singapore, and the Swiss National Bank, the endeavor utilized decentralized finance (DeFi) concepts on a public blockchain to test cross-border settlements of hypothetical CBDCs. These digital versions of the euro, Singapore dollar, and Swiss franc were transferred between mock financial institutions.
A shared token standard on a public blockchain was employed, alongside bridges that permitted smooth CBDC transfers between distinct networks. But what truly sets this trial apart was the inclusion of a unique type of decentralized exchange. This exchange was devised to enable the trade and automatic settlement of spot foreign exchange transactions.
Feedback from the participants paints the experiment in a positive light. While the trial’s outcome has been deemed successful, there’s an acknowledgment that more exploratory work remains. Despite the promising results, the banks issued a clear disclaimer regarding the trial’s exploratory nature: Project Mariana, as of now, neither indicates a concrete decision to roll out CBDCs nor does it endorse a specific DeFi technology or solution.
CBDCs: A Global Dialogue
Beyond this trial, CBDCs continue to occupy significant discourse space in global financial circles. Agustín Carstens, BIS’s general manager, underscored the imperative of elucidating national legal frameworks, particularly in nations where central banks currently lack the mandate to issue CBDCs.
The BIS has been a key player in steering CBDC conversations, commissioning multiple pilot tests worldwide. Notably, the central banks of Hong Kong and Israel revealed their Project Sela’s outcomes. Simultaneously, the Hong Kong Monetary Authority’s Eddie Yue hinted at the burgeoning scope of Project mBridge, roping in the central banks of countries like China, Thailand, and the United Arab Emirates.