The Bank for International Settlements (BIS) and three central banks have concluded a significant central bank digital currency (CBDC) project.
Known as “Project Mariana,” this collaborative initiative was developed by three BIS Innovation Hub centers in conjunction with the Bank of France, the Monetary Authority of Singapore, and the Swiss National Bank. The project focused on testing the cross-border trading and settlement of hypothetical wholesale central bank digital currencies (wCBDCs) denominated in euros, Singapore dollars, and Swiss francs. Notably, this testing utilized decentralized finance (DeFi) technology concepts on a public blockchain.
The success of Project Mariana rested on three key elements, as outlined in the press release:
- Common Technical Token Standard: A common technical token standard provided by a public blockchain facilitated the exchange and interoperability between different currencies.
- Interconnected Bridges: Bridges were established to enable the seamless transfer of wCBDCs between different networks.
- Automated Market Maker (AMM): An Automated Market Maker, a decentralized exchange type, was employed to facilitate automatic trading and settlement of spot foreign exchange (FX) transactions.
The AMM effectively pooled liquidity from hypothetical wCBDCs, enabling immediate pricing, execution, and settlement of spot FX transactions. These protocols hold the potential for future use in the next generation of financial market infrastructures, enabling streamlined cross-border trading and settlement operations among financial institutions.
Project Mariana’s architectural design successfully balanced the central banks’ need for oversight and autonomy with financial institutions’ interest in efficiently holding, transferring, and settling wCBDCs across borders. This was achieved by implementing a common token standard on a public blockchain, facilitating interoperability and seamless exchange of wCBDCs across various local payment and settlement systems maintained by participating central banks.
It is essential to clarify that Project Mariana was experimental and does not indicate any intention by the partner central banks to issue wCBDCs or endorse DeFi or any specific technological solution.
Cecilia Skingsley, head of the BIS Innovation Hub, commented on the project’s significance, 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.”
The BIS previously reported in July that 93% of central banks are actively engaged in some form of CBDC project. It also noted a decreasing level of uncertainty regarding short-term CBDC issuance and projected that there could be 15 retail and nine wholesale CBDCs publicly circulating by 2030.