Global: BIS Leverages DeFi Principles in Successful Cross-Border wCBDC Experiments

BIS applies DeFi principles to cross border wCBDC tests
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In a collaborative effort, the Bank for International Settlements (BIS) and the central banks of France, Singapore, and Switzerland have achieved successful tests involving the cross-border trading and settlement of wholesale central bank digital currencies (wCBDCs) among financial institutions. These groundbreaking experiments harnessed novel decentralized finance (DeFi) concepts on a public blockchain.

Known as Project Mariana, this initiative was jointly developed by three BIS Innovation Hub centers situated in Switzerland, Singapore, and Europe. The central banks of France, Singapore (Monetary Authority of Singapore), and Switzerland (Swiss National Bank) actively participated in the project.

During the proof-of-concept phase, Project Mariana effectively examined the cross-border trading and settlement of hypothetical wCBDCs denominated in euros, Singapore dollars, and Swiss francs. These transactions were conducted among simulated financial institutions.

An essential component of this project was the integration of an Automated Market Maker (AMM), a specific type of decentralized exchange designed to automatically facilitate spot foreign exchange (FX) transactions.

While the BIS does not explicitly endorse the adoption of DeFi, it acknowledges that such protocols could find application in the next generation of financial market infrastructures. These technologies hold the potential to streamline cross-border trading and settlement operations among financial institutions.

The BIS emphasizes that as tokenization and DeFi technologies are still in their early stages, additional research and experimentation are necessary. The BIS Innovation Hub, in collaboration with its global partners, will continue exploring the benefits and challenges of these technologies within relevant use cases.

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