To lower the cost of cross-border payments, the central banks of France, Switzerland, and Singapore are attempting to automate foreign exchange markets using decentralized protocols. The Mariana project, run by the Innovation Hub of the Bank for International Settlements (BIS), examines whether the traditional, time-consuming methods of connecting buyers and sellers of various fiat currencies may be replaced by the protocols used in intermediary-free decentralized finance (DeFi).
According to BIS, DeFi and its applications could contribute to the financial ecosystem in a way that is systemically significant. It went on to say that automated market makers, who employ liquidity pools and algorithms to decide prices between tokenized assets like central bank digital currencies, might "form the basis for a new generation of financial infrastructure" (CBDCs).
The BIS has been coordinating a number of projects, including the Mariana project, to examine whether national digital currencies may be utilized in regular transactions or on financial markets. Since there is no visible party to be held liable for DeFi, authorities are also considering how to control it. DeFi was even referred to as a "illusion" in a BIS paper from last December, which claimed that centralized governance is unavoidable.