The project, dubbed Mariana, will also incorporate the central banks of France, Singapore, and Switzerland to study the “potential between financial institutions to settle foreign exchange trades in financial markets,” the BIS said in a press statement on November 2. According to BIS, the project will look into the automated market makers (AMM) for international payments leveraging the hypothetical Swiss franc, Euro and Singapore dollar wholesale CBDCs. The project’s outcome will result in delivering a proof of concept later next year.
Automating foreign exchange markets
Notably, the use of DeFi protocols intends to automate foreign exchange markets and settlement with the final aim of enhancing cross-border payments. If the project is successful, the BIS noted that the AMM protocols used will have the potential to act as the foundation of the new generation of financial infrastructures powering the cross-border exchange of CBDCs. It is worth noting that innovative algorithms back the AMM protocols used in the project pools liquidity to set the prices between two or more tokenized assets. Furthermore, the project participants are expected to deploy the Eurosystem, Singapore and Switzerland BIS Innovation Hub Centres alongside the Bank of France, the Monetary Authority of Singapore and the Swiss National Bank. Overall, the latest BIS initiative is part of the growing global research into the development of CBDCs. Notably, most jurisdictions are opting for CBDCs as a means to counter the growth of private cryptocurrencies. Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
