The Bank for International Settlements (BIS) and the central banks of France, Singapore, and Switzerland have successfully tested cross-border wholesale CBDCs.

The project trialled the international trading and settlement of hypothetical euros, Singapore dollars, and Swiss francs between simulated financial institutions, using new decentralised finance (DeFi) technology on a public blockchain.

The trading and settlement process relied on three main elements: a common technical token standard provided by a public blockchain to facilitate exchange and interoperability between the different currencies; bridges for the seamless transfer of wholesale CBDCs between different networks; and an Automated Market Maker (AMM), a specific type of decentralised exchange to trade and settle spot FX transactions automatically.

The AMM pooled the liquidity of the hypothetical euro, Singapore dollar and Swiss franc wholesale CBDCs with "innovative algorithms", which enabled spot FX transactions to be priced and executed automatically and settled immediately.

BIS explained that the project's architecture balances central banks' domestic needs for oversight and autonomy with financial institutions' interest in efficiently holding, transferring, and settling wholesale CBDC across borders.

This is possible via a common token standard on a public blockchain which facilitates interoperability and seamless exchange of the digital currencies across varied local payment and settlement systems maintained by participant central banks.

The bank said that DeFi tested in the project, specifically automated market makers, could form the basis for “a new generation of financial market infrastructures”..

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

"Bringing together a diverse team of software engineers, policy, and FX experts across three Innovation Hub centres and central banks was key to this success."

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