- The Bank for International Settlements (BIS) just concluded whole CBDC testing.
- The testing featured DeFi, AMM and other Decentralized innovations.
The Bank for International Settlement (BIS) in collaboration with several central banks in certain regions including France, Singapore, and Switzerland, has successfully tested cross-border settlements using wholesale Central Bank Digital Currencies (wCBDCs).
The initiative which was dubbed “Project Mariana” tested the cross-border trading and settlement of wholesale wCBDCs between financial institutions, by utilizing new Decentralized Finance (DeFi) technology concepts on a public blockchain.
Markedly, Project Mariana is a joint collaboration between three BIS Innovation Hub centers (the Swiss, Singapore, and Eurosystem Hub Centres) alongside the Bank of France, the Monetary Authority of Singapore, and the Swiss National Bank. Together, they validated the use of the hypothetical euro, Singapore dollar, and Swiss franc for cross-border payments.
Project Mariana: Key Elements
The project focused on three key elements throughout the testing process. Firstly, the establishment of a common technical token standard which would be provided by a public blockchain to improve exchange and interoperability between the different currencies.
Secondly, it considered the introduction of bridges to facilitate seamless wCBDCs transfers. Finally, Project Mariana examined the concept of Automated Market Makers (AMM) for automated pricing and the settlement of spot FX transactions.
Cecilia Skingsley, Head of the BIS Innovation Hub believes that Project Mariana pioneers the use of novel technology for interbank foreign exchange markets. In addition, she noted that it successfully demonstrated that it is feasible to exchange wholesale CBDC across borders using novel concepts such as AMMs.
Meanwhile, “bringing together a diverse team of software engineers, policy, and FX experts across three Innovation Hub centers and central banks was key to this success,” Skingsley noted.
All of these solutions including DeFi technology and AMMs are likely to hold the keys to the next generation of financial market infrastructure, per the report from BIS.
The body noted that these proprietary decentralized technologies could promote cross-border trading and settlements. At the same time, BIS clarified that the initiative is not an indication that any of the central banks involved in the testing intend to issue a wCBDC or endorse DeFi or even other technological advancements.
Crypto Proponents Fight Against CBDCs as XMR, ZEC and DASH’s Popularity Increase
As several central banks get busy working on the potential of implementing their CBDCs, crypto enthusiasts are still not optimistic about the lofty idea. These crypto proponents are concerned that CBDCs will take away financial freedom from users, leaving them at the mercy of the government.
John Reed Stark, a former official of the U.S. Securities and Exchange Commission (SEC) and currently the president of cybersecurity firm John Reed Stark Consulting, criticized the idea of a CDBC on the X app. He called it the most absurd financial idea in the history of monetary policy.
Consequently, millions of crypto enthusiasts are gradually flocking around privacy-centric coins like Monero (XMR), ZCash (ZEC), and Dash (DASH). These kinds of tokens are believed to offer financial freedom while maintaining anonymity and are a better alternative to CBDCs.
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