France, Singapore, and Switzerland Join Forces

• According to the latest report, the joint CBDC test between France, Singapore, Switzerland, and the Bank of International Settlements has been concluded.
• General manager for BIS Agustín Carstens has stated that the framework for protecting user privacy should be strictly encouraged.

The global exploration of Central Bank Digital Currency (CBDC) gets into shape after collaboration from the central banks of France, Singapore, and Switzerland and the Bank for International Settlements (BIS) comes to an end. The Project Mariana developed by the “Banque de France, the Monetary Authority of Singapore, and the Swiss National Bank” put cross-border trade to the test.

In addition, decentralized finance technology concepts on the public blockchain were used for the whole test of “settlement of hypothetical euro, Singapore dollar, and Swiss franc CBDCs” between simulated financial institutions.

With this concept, a common token standard was used on a public blockchain for a smooth transfer of the CBDCs across different blockchains. On top of that, a particular decentralized exchange for the settlement of spot foreign exchange transactions was considered. 

With regards to the experiment, the latest release has confirmed that though further research and experimentation are needed, it is still considered successful. 

Project Mariana is purely experimental and does not indicate that any of the partner central banks intend to issue CBDC or endorse DeFi or a particular technological solution.

Recently, BIS general manager Agustín Carstens spoke about the general framework protecting user privacy while maintaining their monetary freedom in the US of CBDC. 

More on CBDC Development

According to Carstens, the legitimacy of CBDC would come from the legal authority of the Central Bank that issues it. Based on the current laws, the majority of central banks do not have the legal basis to issue digital currencies.

According to an IMF [International Monetary Fund] paper published in 2021, close to 80% of central banks are either not allowed to issue a digital currency under their existing laws, or the legal framework is unclear.

A recent BIS report disclosed that 93 percent of central banks across the world are in the process of developing CBDC. For now, the principal promoter of CBDC across the globe is BIS. Several pilot tests are reportedly going on worldwide with Hong Kong and Israel releasing the results of their projects this September. 

mBridge CBDC project currently includes central banks from China, Hong Kong, Thailand, and the UAE. According to Hong Kong Monetary Authority (HKMA) CEO Eddie Yue, it may soon record a massive expansion.

We are expecting to welcome more fellow central banks to join this open platform. And very soon we will launch what we call a minimum viable product, with the aim of paving the way for the gradual commercialization of mBridge.

In another report by the Bank for International Settlements Innovation Hub (BISIH), the flaws and risks of cryptocurrencies, stablecoins, and decentralized finance (DeFi) were highlighted. Issues of instability of stablecoins, irreversibility of smart contracts, and centralization of crypto trading were mentioned. 

As of March 2023, 64 countries are in the most advanced stages with more than 20 banks having launched their pilots. In this year alone, 18 countries had made the most significant progress on CBDCs as of March. 

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