Project Mariana, undertaken by the central banks of Singapore, France and Switzerland under the overview of the BIS, saw tests on wholesale CBDC use cases.
The Bank for International Settlements has conducted CBDC projects with central banks in the past. Days ago, it completed a project with the central banks of Hong Kong and Israel. It explored retail CBDCs along with other private partners. Now, once again, the BIS has concluded a wholesale CBDC exercise called Project Mariana with other central banks.
The central banks mainly tested for cross-border settlements through wholesale CBDCs. The CBDC project saw participation from Banque de France, the Swiss National Bank, and the Monetary Authority of Singapore. Project Mariana also saw the BIS as its supervisor.
According to a press release, the project tested cross-border settlements in hypothetical Swiss francs, euros and Singapore dollars. It used decentralized finance (DeFI) technology theories on a public blockchain.
The project successfully conducted the proof-of-concept of wholesale CBDCs in the three currencies using a few elements. Firstly, it relied on a token standard by the public blockchain, which helped in interoperability and exchange between the currencies. Secondly, the wholesale CBDCs were transferred smoothly between different networks through bridges. Meanwhile, an Automated Market Maker (AMM) also helped the project.
The AMM pooled the liquidity of the three currencies. It helped spot FX transactions, which were executed and settled immediately, which mainly facilitated the cross-border settlements.
The press release stated the exercise was completely experimental. Further experimentation and research would aid the project, it implied.
Emmanuelle Assouan from Banque de France said, “Mariana is a novel experiment in several aspects: we have developed a practical solution to exchange multi-CBDCs in a global network interoperable with regional platforms on which the CBDC of each jurisdiction is issued; this could be a forerunner for the functioning of cross-border payments in the future.”
The CBDC project’s results come just a day after BIS’s General Manager spoke on the legal frameworks for CBDCs. Meanwhile, interoperability for CBDCs has not been an unexplored subject. The SWIFT network has partnered with central banks for the same while testing its efficiency and scale.
CBDC adoption has also progressed steadily around the world. The biggest surprise has been from China, though. Despite a ban on crypto trading, the country has actively promoted its CBDC through various activities. The benefits of CBDCs and their underlying technology have also emerged prominently during the process.
Other bright sparks include the digital euro and other jurisdictions like Singapore and India. Europe has the added benefit of concrete crypto regulation, which has aided its crypto industry. Right from crypto trading to CBDCs, the region has been a motivation for countries in terms of crypto. The UK is also a big frontrunner in the crypto race with its pro-industry initiatives.