BRI to Test DeFi Protocols in MNBC FX Markets

BRI to Test DeFi Protocols on MNBC Exchange Markets

The Bank for International Settlements (BIS) says DeFi’s automated market creation technology can serve as “the foundation for a new generation of financial infrastructure.”

According to a new announcement on November 2, the Bank for International Settlements, together with the central banks of France, Singapore and Switzerland, will launch a new initiative dubbed the Mariana Project, as part of the study of blockchain technology. Project Mariana intends to use decentralized finance or DeFi protocols to automate forex markets and settlements.

This includes the use of DeFi protocols to incentivize hypothetical cross-border transaction exchanges between the Swiss franc, euro and Singapore dollar in MNBC (central bank digital currencies). The technologies involved in the creation of Project Mariana include smart contracts and automated market maker or AMM protocols.

The researchers aim to combine the liquidity pooled in MA with innovative algorithms to price tokenized assets that could potentially become a trading base for MNBC.

As an organization set up by central banks to regulate the international financial system, the BIS wrote that “AMM protocols could become the backbone of a new generation of financial infrastructure facilitating the cross-border exchange of MNBC.” Cecilia Skingsley, head of the BIS Innovation Center, added:

“This groundbreaking project takes our MNBC research to new frontiers, including some promising insights from the DeFi ecosystem. Mariana also marks the first collaboration between centers of innovation; expect to see more in the future.

BIS and cooperating central banks have set a target date of mid-2023 for proof of concept submission. The financial institution has previously been skeptical about digital assets due to their inherent price fluctuations and lack of a unified regulatory framework. However, BIS praised elements of distributed ledger networks, such as their technological superiority over fiat currency. According to a recent BIS report, 90% of the world’s central banks are currently looking into the usefulness of the MNBK.

Zhiyuan Sun, Cointelegraph

Zhiyuan Sun is a technical writer at Cointelegraph. He was originally a rookie in mechanical engineering at university but quickly became fascinated with cryptocurrencies and finance. He has many years of experience writing for major financial media such as The Motley Fool, and Seeking Alpha. Away from the enclosure, it can be found in deep sea diving equipment.

The opinions expressed here are solely those of the author and do not necessarily reflect the views of Forex Quebec. Every investment and trading move involves risk, so you should do your own research when making a decision.

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