DeFi
cryptonews.net
02 November 2022 13:47, UTC
Reading time: ~2 m
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 Innovation Hub of the Bank for International Settlements (BIS), is exploring whether the protocols used in intermediary-free decentralized finance (DeFi) can replace the traditional, more laborious 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. It 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 state digital currencies can be used in everyday transactions or in financial markets. Meanwhile, officials are also thinking over 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.
Image: Myfin
Sourced from cryptonews.net.
