Wholesale CBDCs and automatic market makers could be the perfect pair, BIS finds

The Bank of International Settlements conducted the project in partnership with central banks from France, Singapore and Switzerland


William Potter/Shutterstock modified by Blockworks


The Bank of International Settlements announced the conclusion of Project Mariana, which tested cross-border trading and settlement of a central bank digital currency (CBDC).

The project, which spanned months, took place in partnership with the central banks of France, Singapore and Switzerland. The goal was to create a settlement system for a wholesale CBDC, the type of CBDC used between financial institutions. 

The experiment does not necessarily imply that any of the participating countries will adopt a CBDC. 

“In the tested experimental setup, central banks are able to manage their wCBDC without necessarily operating or controlling the underlying infrastructure. Commercial banks can use the wCBDCs to engage in instant FX trading and settlement, avoiding credit and settlement risk and improving efficiency,” the paper said.

Throughout the experiment, Project Mariana focused on three elements: “a common technical token standard” which allowed for interoperability between various currencies and was provided by a public blockchain, bridges for the transfers of the CBDCs, and an automatic market maker (AMM). 

An AMM is a type of decentralized exchange that has “smart contracts that allow traders to exchange one crypto asset — or tokenized assets more generally — for another, by drawing on a common pool of liquidity. Prices are determined by a pre-specified algorithm.”

Project Mariana also discovered some challenges for banks: “For example, the 24 hours a day 7 days a week availability of wCBDC may increase operational complexities for central bank.” 

However, it further notes, “commercial banks can use the wCBDCs to engage in instant [foreign exchange] trading and settlement, avoiding credit and settlement risk and improving efficiency.”

Read more: Combine CBDCs, tokenized deposits on a unified ledger, BIS says

Additionally, “further work is needed to understand the role of central banks and wCBDCs in a broader tokenised ecosystem potentially including stablecoins, tokenised deposits and financial instruments, such as tokenised bonds and securities.”

“Project Mariana pioneers the use of novel technology for interbank foreign exchange markets. It successfully demonstrated that it is feasible to exchange wholesale CBDC across borders using novel concepts such as automated market makers,” said Cecilia Skingsley, head of the BIS Innovation Hub

But the paper also echoes a point made by the BIS chief in a speech earlier this week, “collaboration among stakeholders will be key.”

Agustin Carstens, the general manager of the BIS, said “international coordination and cooperation is critical” and that it would be “unfortunate” to have digital currencies that don’t interoperate.

The BIS has been actively researching CBDCs throughout this year, with multiple studies finding that roughly 90% of central banks are interested in exploring “some form” of CBDCs, as well as how central banks could properly protect “resilient” CBDC systems.

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