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The central banks of France, Switzerland and Singapore are trying to automate foreign exchange markets using decentralized protocols to reduce the cost of cross-border payments. The Mariana project, coordinated by the Bank for International Settlements (BIS) Innovation Center, is exploring whether the protocols used in direct-to-peer decentralized finance (DeFi) can replace the traditional, more labor-intensive processes of matching buyers and sellers of different fiat currencies.
BIS stated on its website that DeFi and its applications could become systemically important parts of the financial ecosystem. He added that automated market makers could become “the basis for a new generation of financial infrastructure.” These automated protocols use liquidity pools and algorithms to determine prices between tokenized assets such as central bank digital currencies (CBDCs).
The Mariana project is the latest in a series of projects organized by the BIS, bringing together the world’s central banks to explore whether government-issued digital currencies can be used in everyday transactions or in financial markets. Meanwhile, officials are also wrestling with how to regulate DeFi, given that there is no obvious entity to be held accountable for. One study by BIS last December even called DeFi an “illusion”, stating that centralized governance is inevitable.
#France #Switzerland #Singapore #Test #DeFi #Forex #Markets