BRI tests DeFi protocols on MNBC exchange markets
The Bank for International Settlements (BIS) says automated market-making technology in DeFi can serve as “the foundation for a new generation of financial infrastructure.”
On November 2, the Bank for International Settlements – along with the central banks of France, Singapore and Switzerland – will launch a new initiative dubbed “Project Mariana” in the exploration of blockchain technology. Mariana projected the intention to use decentralized finance protocols, or DeFi, to automate foreign exchange markets and regulations.
This includes the use of DeFi protocols to stimulate the hypothetical exchange of cross-border transactions between the Swiss franc, the euro and the Singapore dollar, in MNBC (digital central bank currencies). Technologies involved in building Project Mariana include smart contracts and Automated Market Maker, or AMM, protocols.
Researchers seeking to combine the liquidity pooled in MAs with innovative algorithms for determining the prices of tokenized assets, are eventually developed into a base of exchanges for MNBCs.
As an organization created by central banks to regulate the international financial framework, the BIS wrote that “AMM protocols serve to form the basis of a new generation of financial infrastructure facilitating the cross-border exchange of MNBC”. Cecilia Skingsley, BRI Innovation Center Manager, added:
“This pioneering project pushes our MNBC research to innovative frontiers, incorporating some of the promising ideas from the DeFi ecosystem. Mariana also marked the first collaboration between the Innovation Hub Centers; expect to see more in the future.
The BIS and collaborating central banks have set a tentative date at E-2023 for the release of a forecast concept. The financial institution is skeptical about protecting digital business given the inherent price variation and lack of a unified regulator. Nonetheless, the BIS praises elements of distributed ledger networks, such as their technological prowess over fiat currency. According to a recent report registered by the BIS, 90% of the world’s central banks are currently studying the usefulness of the MNBC.
By Zhiyuan Sun, Cointelegraph
Zhiyuan Sun is a technology writer at Cointelegraph. Initially starting out as a mechanical genius in college, he quickly developed a passion for cryptocurrencies and finance. Many years of experience writing for major financial media such as The Motley Fool, Nasdaq.com and Seeking Alpha. When away from its enclosure, it can be found in deep-sea diving gear.
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