Project Mariana, The Bank of International Settlements & CBDCs

BIS and Central Banks Explore Cross-Border CBDCs with DeFi Technologies

The Bank for International Settlements (BIS), in collaboration with the central banks of France, Singapore, and Switzerland, has unveiled the successful execution of a pioneering test for cross-border trading and settlement using wholesale central bank digital currencies (wCBDCs). This groundbreaking initiative, named Project Mariana, leveraged decentralized finance (DeFi) technologies and was conducted on a public blockchain.

Innovating Cross-Border Trading with Project Mariana

Project Mariana was a joint endeavor by the BIS Innovation Hub centers in Switzerland, Singapore, and the Eurosystem, alongside the Bank of France, the Monetary Authority of Singapore, and the Swiss National Bank. It showcased the potential of interoperable trading and settlement of hypothetical euro, Singapore dollar, and Swiss franc wCBDCs among simulated financial institutions.

The project revolved around three pivotal components:

1. Common Technical Token Standard: A uniform token provided by a public blockchain to ensure interoperability and exchange between different currencies.
2. Bridges for Transfer: Mechanisms designed to enable smooth transfer of wCBDCs across diverse networks.
3. Automated Market Maker (AMM): A decentralized exchange specialized in automatic pricing, execution, and immediate settlement of spot FX transactions.

Enhancing Liquidity and Interoperability

The AMM played a crucial role in pooling liquidity from the hypothetical wCBDCs, utilizing advanced algorithms for automatic pricing and execution of transactions. The project aimed to delve into the possibilities of next-generation financial market infrastructures that can optimize cross-border trading and settlement processes among financial institutions.

Project Mariana leveraged a public blockchain to facilitate seamless exchange and interoperability across various local payment and settlement systems maintained by the participating central banks, providing valuable insights into integrating an international perspective into ongoing wCBDC design explorations.

Pioneering Interbank Foreign Exchange Markets

Cecilia Skingsley, Head of the BIS Innovation Hub, emphasized the innovative nature of Project Mariana, stating, “Project Mariana pioneers the use of novel technology for interbank foreign exchange markets. It successfully demonstrated that it is feasible to exchange wholesale CBDC across borders using novel concepts such as automated market makers.”

Looking Forward

While the success of Project Mariana is a noteworthy advancement, the report highlighted the importance of acknowledging that tokenization and DeFi technologies are still in their nascent stages. The exploration and implementation of these technologies are crucial for understanding and developing the future landscape of international financial transactions and currency exchanges.

Conclusion

The collaborative effort by BIS and the central banks of France, Singapore, and Switzerland in Project Mariana marks a significant stride in the exploration of cross-border wCBDCs using DeFi technologies. The project not only demonstrated the feasibility of interoperable exchange of wCBDCs but also paved the way for future innovations in interbank foreign exchange markets and international financial infrastructures. The insights gained from this initiative will be instrumental in shaping the evolution of wCBDC designs and their role in the global financial ecosystem.