Breaking Boundaries: BIS and Key Central Banks Triumph in Wholesale CBDC Cross-Border Trade Experiment

Breaking Boundaries: BIS and Key Central Banks Triumph in Wholesale CBDC Cross-Border Trade Experiment

Crypto News – The Bank for International Settlements, in collaboration with the central banks of France, Singapore, and Switzerland, recently conducted a successful experiment utilizing wholesale Central Bank Digital Currencies (wCBDCs) for cross-border trading, as detailed in a recent report.

The proof of concept, known as Project Mariana, utilized hypothetical wCBDCs for the euro, Singapore dollar, and Swiss franc, facilitating transactions between simulated financial institutions. The project was built upon a standardized token system on a public blockchain, streamlining the exchange and interoperability of wCBDCs across diverse local payment and settlement systems maintained by participating central banks, as outlined in an accompanying press release.

Given the increasing global interest in issuing wholesale CBDCs to facilitate interbank transfers, especially among European and Asian nations, Project Mariana sought to investigate how cross-border settlements and foreign exchange could operate in a landscape where central banks have introduced CBDCs. Banque de France had previously highlighted the potential of wholesale CBDCs to enhance cross-border payments.

Cecilia Skingsley, Head of the BIS Innovation Hub, remarked on the groundbreaking nature of Project Mariana, stating, ‘Project Mariana pioneers the use of novel technology within interbank foreign exchange markets. It successfully demonstrated the feasibility of cross-border wCBDC exchanges by employing innovative concepts such as automated market makers (AMMs),’ referring to these AMMs as an autonomous trading mechanism, akin to a decentralized exchange, used in this experiment.

The report also highlighted the utilization of smart contracts, enabling central banks to manage their wCBDC without requiring direct operation or control of the underlying platform.

Furthermore, the press release emphasized the potential of DeFi (decentralized finance) elements, particularly automated market makers, tested in the project, suggesting that they could serve as the foundation for a new generation of financial market infrastructures.