The Bank for International Settlements said an experiment showed that wholesale central bank digital currencies can be used to facilitate cross-border trading and settlement between financial institutions.

Experiment Details: BIS said its Project Mariana successfully used decentralized finance technology to pool hypothetical wholesale CBDCs to enable foreign-exchange transactions to be priced and executed automatically and settled immediately between financial institutions. The central banks of Singapore, France, and Switzerland participated in the experiment.

BIS CBDC Support: The announcement followed a speech by BIS General Manager Agustin Carstens touting the benefits of both wholesale and retail CBDCs. Carstens said central banks must evolve and coordinate the development of CBDCs to avoid a fragmented system and legal framework in which different digital currencies don't interoperate.

Background: A wholesale—as opposed to retail—CBDC would function between banks and closely resemble bank reserves. The Federal Reserve Bank of New York has previously studied the feasibility of an interoperable network of wholesale CBDCs.

ICBA View: ICBA opposes the creation of a U.S. CBDC, arguing that it would disintermediate community banks and pose privacy risks without improving on superior payment alternatives, such as FedNow. It recently commended the House Financial Services Committee for passing legislation to restrict the Federal Reserve from issuing a CBDC.