BIS and Central Banks of France, Singapore, Switzerland to Explore CBDCs, DeFi Protocols

The BIS Innovation Hub is launching a new project around central bank digital currencies (CBDCs) and Decentralized Finance (DeFi) protocols “as part of its 2022 work program.”

Project Mariana “explores automated market makers (AMM) for the cross-border exchange of hypothetical Swiss franc, euro and Singapore dollar wholesale CBDCs.” It will seek “to examine the potential between financial institutions to settle foreign exchange trades in financial markets.”

The project “involves the Eurosystem, Singapore and Switzerland BIS Innovation Hub Centres together with the Bank of France, Monetary Authority of Singapore and Swiss National Bank.”

The aim is “to deliver a proof of concept by mid-2023.”

Project Mariana uses DeFi protocols “to automate foreign exchange markets and settlement, potentially improving cross-border payments (and supporting a priority of the Group of 20).”

Today, DeFi built on public blockchains, “uses smart contract protocols to automate markets for crypto and digital assets. AMM protocols combine pooled liquidity with innovative algorithms to determine the prices between two or more tokenized assets.” In the future, similar AMM protocols could “form the basis for a new generation of financial infrastructures facilitating the cross-border exchange of CBDCs.”

Cecilia Skingsley, Head of the BIS Innovation Hub, stated:

“This pioneering project pushes our CBDC research into innovative frontiers, incorporating some of the promising ideas of the DeFi ecosystem. Mariana also marks the first collaboration across Innovation Hub Centres; expect to see more in the future.”

As covered in October 2022, the Bank for International Settlements (BIS) and the central banks of Israel, Norway and Sweden are launching Project Icebreaker, a joint exploration of how central bank digital currencies (CBDCs) can be “used for international retail and remittance payments.”

Cross-border payments “continue to be plagued by high costs, low speed, limited access and insufficient transparency.”

The G20 has “launched an ambitious program to improve cross-border payments, aiming to achieve faster and cheaper, as well as more transparent and inclusive cross-border payments.”

One of the workstreams “explores how CBDCs could play a role in enhancing cross-border payments.” The BIS Innovation Hub and other international institutions and standard-setting committees “have been working together to investigate the use of CBDCs for cross-border payments.”

The most recent report was “published last July.”

Project Icebreaker is “a collaboration between the Bank of Israel, Central Bank of Norway, Sveriges Riksbank and BIS Innovation Hub Nordic Centre to develop a ‘hub’ to which participating central banks will connect their domestic proof-of-concept CBDC systems.”

Register Now!
Sponsored Links by DQ Promote



Send this to a friend