BIS and Central Banks of France, Singapore, and Switzerland Test Cross-Border Wholesale CBSCs

Jimmy Aki
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The Bank for International Settlements (BIS) and the central banks of France, Singapore, and Switzerland have successfully conducted a trial of cross-border trading for wholesale central bank digital currencies (CBDCs) known as Project Mariana.

A Successful Cross-Border Trading of Wholesale CBDC Using DeFi

On September 28, the Banque de France released a report on the conclusion of a joint test of the cross-border trading and settlement CBDCs.

As per the press release, the successful culmination of Project Mariana was a collaborative achievement involving BIS and the central banks of France, Singapore, and Switzerland.

This initiative focused on experimenting with decentralized finance (DeFi) technology concepts on a public blockchain. Its primary aim is to create a framework for facilitating cross-border trading and settlement of wholesale CBDCs among various financial institutions.

Project Mariana was a collaborative effort involving three BIS Innovation Hub Centres – Swiss, Eurosystem, and Singapore Hub Centres. This also includes the participation of the Banque de France, the Monetary Authority of Singapore, and the Swiss National Bank.

According to the report, these bodies successfully tested the cross-border trading and settlement of hypothetical wCBDCs denominated in Swiss francs, euros, and Singapore dollars among simulated financial institutions.

In addition, the project’s architecture was designed to balance central banks’ need for domestic autonomy and financial institutions’ desire for efficient management, transfer, as well as settlement of wholesale CBDCs across borders.

Meanwhile, the press release emphasized that the project is purely experimental and does not imply that any partner central banks have plans to issue wholesale CBDCs or endorse DeFi.

The report added that this is the first cross-border project of the BIS Innovation Hub.

As such, the hub and its global partners will continue their collaborative efforts to assess the advantages and challenges, focusing on pertinent use cases.

Thomas Moser, an Alternate Member of the Governing Board of the Swiss National Bank, lauded this groundbreaking achievement.

He emphasized the importance of secure and efficient pricing and exchange mechanisms for cross-currency transactions in a future where tokenized assets play a central role.

BIS Chief Emphasizes Legal Safeguards for CBDC User Privacy Protection

On September 27, Agustín Carstens, the General Manager of the BIS, delivered a keynote address at the BIS Innovation Hub conference in Switzerland. He highlighted the pivotal role of legal frameworks in the context of central bank digital currencies (CBDCs).

Carstens emphasized that the successful adoption of CBDCs hinges on establishing robust legal structures.

Furthermore, he stressed the importance of these frameworks in safeguarding user privacy while granting individuals the freedom to choose between CBDCs and other monetary options.

Carstens also sheds light on the fact that legal regulations in various countries dictate the types of currencies their respective central banks can issue. This includes physical cash as well as credit balances held in current and reserve accounts.

Addressing concerns about the potential misuse of CBDCs for implementing social credit systems, Carstens emphasized the necessity for CBDCs to operate within a clearly defined framework of rights and responsibilities.

Meanwhile, a significant development occurred in the United States as the CBDC Anti-Surveillance State Act bill passed a vote within the House Financial Services Committee on September 20, 2023.

This bill, aimed at curtailing the U.S. Federal Reserve’s authority to introduce a CBDC, is now poised to advance to Congress with the mission of resisting “government dominance over currency.”

About Jimmy Aki PRO INVESTOR

Based in the UK, Jimmy is an economic researcher with outstanding hands-on and heads-on experience in Macroeconomic finance analysis, forecasting and planning. He has honed his skills having worked cross-continental as a finance analyst, which gives him inter-cultural experience. He currently has a strong passion for regulation and macroeconomic trends as it allows him peek under the global bonnet to see how the world works.