The Bank for International Settlements (BIS) and its partner central banks within the Eurosystem have developed a proof of concept to explore the macroeconomic relevance of crypto asset markets and DeFi.
Project Atlas, a collaboration between BIS Innovation Hub Eurosystem Centre, De Nederlandsche Bank and Deutsche Bundesbank, combines off-chain data from crypto exchanges with on-chain data from public blockchains, with a focus on data collection and platform development. The proof of concept uses Bitcoin network transactions between crypto exchanges and their geographical locations as proxies for cross-border capital flows.
The project aims to provide central bankers with data for economic analysis, improving economic forecasting and offering insights into market capitalization and GDP metrics.
Cecilia Skingsley, head of the BIS Innovation Hub, said: “Project Atlas is a great example of what the BIS Innovation Hub can achieve. Working in the intersection of economics, finance and computer engineering, we are developing a new and important public good for central banks globally. The data on cross-border flows are relevant for areas like payments and macroeconomic analysis.”
Kok Kee Chong, CEO of crypto derivatives exchange AsiaNext, said: “This is a promising development for the industry that benefits not just policymakers but institutional market participants too. Providing transparency for cross-border transactions involving crypto assets and DeFi markets will facilitate risk assessment and enable financial stability, ultimately fostering greater trust and innovation within the digital asset ecosystem.”
The proof of concept uses transactions between crypto exchanges in the Bitcoin network, along with the location of those exchanges, as a proxy for cross-border capital flows. Attribution data links on-chain transactions to crypto exchanges, which are then mapped to their geographical location, where possible.
The derived bilateral flows between countries are visualised on a globe that presents the data in a user-friendly and easily accessible manner. An initial analysis of preliminary data shows that cross-border flows are substantial economically and unevenly distributed across geographical regions.
© Markets Media Europe 2023
