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Cross-Border CBDC Trading Tested Using DeFi Technology

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The Bank for International Settlements (BIS), in collaboration with the central banks of France, Singapore, and Switzerland, has successfully executed an experimental cross-border trade utilizing wholesale central bank digital currencies (wCBDCs) and decentralized finance (DeFi) technologies. The pilot project, termed “Project Mariana,” tested the viability of exchanging and settling wCBDCs between simulated financial institutions.

wCBDCs are distinct from retail CBDCs; while the latter are aimed at everyday consumer transactions, wCBDCs are utilized by banks for settling wholesale payments. In the Project Mariana simulation, hypothetical wCBDCs representing the euro, Singapore dollar, and Swiss franc were exchanged using a common technical token standard facilitated by a public blockchain.

The experiment involved the use of bridges for the transfer of wCBDCs and an automated market maker (AMM) for trading activities. AMM contributed to the liquidity of digital currencies and enabled immediate pricing, execution, and settlement of spot foreign exchange transactions through innovative algorithms.

However, the BIS emphasized the exploratory nature of Project Mariana. It remains a theoretical exercise and does not indicate the participating nations’ intent to issue wCBDCs or integrate DeFi technologies imminently. The project serves as a study of the potential mechanisms and technologies that could support the next generation of cross-border trading and settlement infrastructures.

Jay Solano

Jay Solano

Jay is a crypto and NFT enthusiast dedicated to exploring the dynamic world of digital assets. As a crypto blog writer, he is sharing his knowledge of the latest trends, breakthroughs, and investment opportunities in the blockchain world.

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