BIS launched a new initiative Project Mariana to improve cross-border payments
Project Mariana: BIS launched a new initiative to explore the benefits of automating settlement with AMMs and?potentially improve cross-border payments.
On Wednesday, "Project Mariana" was unveiled by Bank for International Settlements (BIS). With the central banks of Singapore, France, and Switzerland, the BIS has started a new initiative to research the feasibility of merging some decentralized financing (DeFi) capabilities with central bank digital currencies (CBDCs). DeFi uses automated market makers (AMMs) to manage the decentralised exchange of tokenized assets. This project was built to explore the design and application of using AMMs for wCBDCs. It would explore the benefits for using automated market makers (AMMs) to automate foreign exchange markets and settlements.
Another main objective behind this project is to investigate if a supra-regional network could work as an efficient and trusted hub for cross-border settlement. It will also research wCBDC governance models within that network. By making cross-border payments faster, cheaper, and more transparent, the project contributes immensely to the G20 priority.
According to the BIS, an AMM is a sort of smart contract that uses liquidity pools to transfer digital assets automatically rather than the more conventional method of matching buyers and sellers. Central banks are working to comprehend how DeFi and its applications will affect cross-border payments since they have the potential to become systemically significant components of the financial ecosystem. In order to settle foreign exchange trades on financial markets, the project investigates the use of AMMs for the cross-border exchange of fictitious Swiss franc, euro, and Singapore dollar wholesale CBDCs between financial institutions.
CBW - External Analyst