The Bank for International Settlements (BIS) along with three major central banks are exploring the use of central bank digital currencies (CBDC) in cross-border payments via DeFi protocols.
BIS announced a collaboration with central banks of Switzerland, Singapore, and France as part of an initiative dubbed Project Mariana to explore blockchain technology. The project will use DeFi protocols to automate currency markets and cross-border payments in CBDCs.
The main goal of Project Mariana is to examine the potential use of automated market makers (AMMs) for cross-border transfers in digital euros, francs, and Singapore dollars. The study will answer the question of whether DeFi protocols can work as an effective and reliable hub for regulating cross-border transactions.
According to Cecilia Skingsley, Head of the BIS innovation hub, tests within Project Mariana will extend the functionality of future CBDCs to include protocols similar to AMMs. She believes that the results could lay the foundation for a new generation of the financial infrastructure that will facilitate cross-border transfers in CBDCs.
Singapore has also begun exploring the possibility of making transactions through DeFi platforms, testing transfers with foreign currency and tokenized government securities. By the way, the multinational financial conglomerate J.P. Morgan made the first ever cross-border transfer via the DeFi protocol on a public blockchain.
