Erratum: The following article was published with a factual error, and was corrected on 2023/12/18 at 11:00 UTCThe article initially suggested that Ripple and the Bank for International Settlements were collaborating to bring Project Mariana to fruition.In actuality, Ripple is following the progress of Project Mariana, and is working on its own, separate project for cross-border FX transactions in a similar vein.
- Ripple is following BiS’ progress on a ground-breaking initiative to reshape the global FX market.
- Project Mariana seeks to revolutionize FX trading using innovative tokenized financial systems.
- Successful testing of wCBDCs has demonstrated the potential for cross-border FX transactions.
Ripple, a leading financial technology company, is seemingly looking to move into the $7.5 trillion global foreign exchange (FX) market, following the Bank for International Settlements (BIS)’ innovative Project Mariana initiative. The parallel initiatives aim to revolutionize FX trading and settlements in the tokenized financial landscape.
Ripple Takes Major Interest in BIS’s Project Mariana
Ripple’s Director for CBDC Business Development, Joe Vollono, recently revealed the company’s keen interest in Project Mariana. The project, spearheaded by the BIS in partnership with the central banks of France, Singapore, and Switzerland, seeks to transform the FX market by harnessing the power of tokenized financial systems.
Central to this exploration is understanding and implementing liquidity pools, which are essential for effectively operating Project Mariana’s proposed models. These pools are crucial in maintaining market stability and providing liquidity for seamless transactions.
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Speaking at a recent conference, Vollono confirmed that what Project Mariana hopes to achieve is something Ripple is watching with great interest.
“Project Mariana is a fascinating body of work, and it’s something Ripple, in parallel, is exploring.”
Implementing automated market maker (AMM) technology is key to executing and settling spot FX trades. This technology ensures that transactions are automated while maintaining security, efficiency, and transparency – a significant step forward in how financial institutions conduct FX transactions. In these terms, Ripple’s Director for CBDC Business Development was quick to highlight pools of liquidity as a crucial aspect of enabling their functionality.
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“That’s [pools of liquidity] one of the often overlooked elements of this is having that liquidity in place. It’s really critical to making sure those models function.”
Project Mariana’s wCBDC Trading Test Proves Successful
The BIS announced the successful completion of a test under Project Mariana. The test focused on the cross-border trading and settlement of simulated wholesale central bank digital currencies (wCBDCs) between various financial institutions. The currencies used in the test were denominated in hypothetical euros, Singapore dollars, and Swiss francs.
The test hinged on several critical components, including a shared technical token standard enabled by public blockchain technology. Additionally, the test involved implementing bridges to facilitate smooth transfers of wCBDCs across various networks.
On the Flipside
- The swift adoption of tokenized systems might disrupt existing structures, leading to resistance and potential fragmentation within the FX market.
- Despite the successful completion of tests involving simulated wCBDCs, there is still the need for real-world stress testing to validate the resilience of these systems under various market scenarios.
Why This Matters
The successful testing of Project Mariana’s models signifies a pivotal moment in transforming the FX market. Though working in parallel, Ripple’s expertise in blockchain technology and cross-border payments holds immense potential to revolutionize FX trading and settlement.
To learn more about the former SEC chair’s challenge in the Ripple case, read here:
Former SEC Chair Challenges Court Ruling in Ripple Case
To delve into Ripple’s progress in the initial phase of the stablecoin project with Palau, read here:
Ripple Progresses to First Stage of Stablecoin Project in Palau
