The Bank for International Settlements (BIS) and the central banks of France, Singapore and Switzerland have successfully concluded Project Mariana. The project tested the cross-border trading and settlement of wholesale central bank digital currencies (wCBDCs) between financial institutions, using new decentralised finance (DeFi) technology concepts on a public blockchain.

Project Mariana was developed jointly by three BIS Innovation Hub centres (the Swiss,  Singapore and Eurosystem Hub Centres) together with Bank of France, Monetary Authority of Singapore, and Swiss National Bank.

The project's proof of concept successfully tested the cross-border trading and settlement of hypothetical euro, Singapore dollar and Swiss franc wCBDCs between simulated financial institutions. The process relied on three 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 wCBDCs between different networks.
• 
  
• An Automated Market Maker (AMM), which is a specific type of decentralized exchange to trade and settle spot FX transactions automatically. 
• 
  

For Project Mariana, the AMM pooled the liquidity of the hypothetical euro, Singapore dollar and Swiss franc wCBDCs, with innovative algorithms enabling spot FX transactions to be priced and executed automatically and settled immediately. These protocols could be used by the next generation of financial market infrastructures facilitating cross-border trading and settlement between financial institutions.

Project Mariana's architecture balances central banks' domestic need for oversight and autonomy with financial institutions’ interest in efficiently holding, transferring, and settling wCBDC across borders. This is achieved through the use of a common token standard on a public blockchain which facilitates interoperability and seamless exchange of wCBDCs across varied local payment and settlement systems maintained by participant central banks. As such, Mariana offers possible approaches to factoring an international dimension into current wCBDC design explorations.

As tokenisation and DeFi technologies are still nascent, further research and experimentation is needed. The BIS Innovation Hub and its global partners will continue exploring their benefits and challenges based on relevant use cases.

Project Mariana is purely experimental and does not indicate that any of the partner central banks intend to issue wCBDC or endorse DeFi or a particular technological solution. It is the Innovation Hub's first cross-centre project.

“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. 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,” said Cecilia Skingsley, Head of the BIS Innovation Hub.

“Mariana is a novel experiment in several aspects: we have developed a practical solution to exchange multi-CBDCs in a global network interoperable with regional platforms on which the CBDC of each jurisdiction is issued; this could be a forerunner for the functioning of cross-border payments in the future.

Mariana also provides a deep-dive analysis of automated market makers opening up opportunities for FX market based on DLTs.

There are still many avenues to explore to improve cross-border payments: Mariana is a cornerstone of the ambition of public authorities in this domain. Banque de France is pleased to host a live demonstration of Mariana at the upcoming Banque de France conference on 3rd October on the potential of wholesale CBDCs,” said Emmanuelle Assouan, Director General for Financial Stability and Operations at Banque de France.

“This collaboration across Singapore, Switzerland and France has demonstrated the potential of open and interoperable networks. The project explored how multi-currency settlement may be performed atomically, while maintaining the independence of respective domestic settlement systems. In addition, this collaboration enables central banks to explore and better understand the policy, governance and technical implications of using automated market markers to facilitate foreign exchange,” said Sopnendu Mohanty, Chief FinTech Officer, MAS.

“In a potential future with tokenised assets, safe and efficient pricing and exchange mechanisms for cross-currency transactions remain essential. Project Mariana demonstrates the feasibility of such an infrastructure in an innovative way,” says Thomas Moser, Alternate Member of the Governing Board of the Swiss National Bank.

***