The Central Bank’s Digital Currencies (CBDC) will be used for cross-border settlement and trading, according to plans made public by the Bank for International Settlements (BIS). These digital currencies will be supported by decentralised finance (Defi) protocols.
To investigate the “potential amongst financial institutions to settle foreign exchange trades in financial markets,” the Mariana project will also include the central banks of France, Singapore, and Switzerland, the BIS stated in a press release on November 2.
The study, according to BIS, will investigate automated market makers (AMM) for international payments using fictitious wholesale CBDCs for the Swiss franc, euro, and Singapore dollar. A proof of concept will be ready the following year after the project is concluded.
The BIS said that if the experiment is successful, the AMM protocols employed might serve as the cornerstone of the new breed of financial infrastructures driving the cross-border trading of CBDCs.
The AMM protocols employed in the project pools’ liquidity to set the prices between two or more tokenized assets are supported by cutting-edge algorithms.
Along with the Bank of France, the Monetary Authority of Singapore, and the Swiss National Bank, the project participants aim to implement the Eurosystem, Singapore, and Switzerland BIS Innovation Hub Centers.
In general, the most recent BIS endeavour is a component of the expanding international research into the creation of CBDCs.