Laptop computer displaying logo of The Bank for International Settlements in an office

BIS backs central bankers on tracking digital currency data under new project

The Bank for International Settlements (BIS) has offered further insights into its plans to create open-source data plans to track the macroeconomic implications of digital currencies and decentralized finance (DeFi).

In a recent publication, BIS notes that Project Atlas will partner with the Deutsche Bundesbank and De Nederlandsche Bank (DNB) to offer new perspectives on digital currencies. At the moment, on-chain data deals primarily with price action, but there is a lack of data concerning the large-scale impact of DeFi on financial stability.

The BIS commented that Project Atlas would offer an intuitive dashboard to offer central bankers and other policymakers information on the international flows of digital assets, market capitalization, and other related market activity.

“Tailored to the needs of central banks, it will fuse reported data gathered from crypto exchanges and stable coin issuers (off-chain data) with data from public blockchains (on-chain data) on an open-source platform,” said the BIS. “By connecting various sources, Atlas will offer a layered approach to data-vetting, allowing users to accurately evaluate the economic significance of these markets.”

The BIS is particularly interested in the impact of digital assets on cross-border transactions and confirms that Project Atlas will focus on tracking the flow of assets across several jurisdictions. This metric will be key in preventing countries from using digital currencies to skirt sanctions and understand flow patterns between regions with varying degrees of regulatory control.

“By providing greater insights into DeFi and crypto markets, starting with a better understanding of the data and technologies used in the industry, Project Atlas will aid policymakers and enhance central banks’ analytical and technical capabilities as well as their overall understanding of the underlying technology,” read the report.

The BIS is also working on Project Mariana, seeking to explore the functionalities of automated market makers (AMM) in cross-border payment in a study with central banks of France, Singapore, and Switzerland.

BIS looks to leverage CBDC to improve payments

As countries advance in their central bank digital currency (CBDC) development, BIS has seized the initiative to carry out several pilots to explore the possibilities of deploying them in cross-border payment.

Preliminary studies involving the central banks of China, Hong Kong, Thailand, and the United Arab Emirates (UAE) resulted in stellar results for BIS. Leveraging on the impressive results, BIS began Project Icebreaker with Israel, Norway, and Sweden to experiment with using retail CBDCs in cross-border payments.

To learn more about central bank digital currencies and some of the design decisions that need to be considered when creating and launching it, read nChain’s CBDC playbook.

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