BIS to Adopt DeFi Implementation in Forex CBDC Markets
In its exploration of blockchain technology, the Bank for International Settlements (BIS), along with the "Eurosystem" – central banks of France, Singapore, and Switzerland will be launching a new project called "Project Mariana."
According to the press release, the project would use decentralized finance (DeFi) protocols to automate foreign exchange markets and settlement while also improving cross-border payments between the Swiss franc, euro, and Singapore dollar wholesale central bank digital currencies, or CBDCs.
The project is built mainly with the applications used in the DeFi sectors, such as smart contracts and automated market maker protocols (AMMs). Project Mariana merges pooled liquidity with innovative algorithms to dictate the prices between two or more tokenized assets to aid the cross-border exchange of CBDCs.
Aside from Project Mariana being used as DeFi implementation, the centralized financial institution also stated that the automated market-making technology can become the "basis for a new generation of financial infrastructure."
Cecilia Skingsley, Head of the BIS Innovation Hub, commented, "This pioneering project pushes our CBDC research into innovative frontiers, incorporating some of the promising ideas of the DeFi ecosystem." She added, "Mariana also marks the first collaboration across Innovation Hub Centres; expect to see more in the future,"
BIS and its central bank partners have set a tentative date to deliver a proof of concept by mid-2023. Notably, this is not the first project BIS will launch. In September, the organization launched Project Icebreaker along with the central banks of Sweden, Norway, and Israel to see how CBDCs can be utilized for international remittance and retail payments.
The project icebreaker was built concerning cross-border payments being accustomed to insufficient transparency, limited access, low speeds, and high costs. As reported by Blockchain.News, this project seeks to explore how central bank digital currencies (CBDCs) can bridge the gap by scrutinizing the technological feasibility and specific vital functions of interjoining various domestic CBDC networks.
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