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Automated Market-Making for Fiat Currencies

Published 24 Sep 2021 in q-fin.TR | (2109.12196v1)

Abstract: We present an automated market-making (AMM) cross-settlement mechanism for digital assets on interoperable blockchains, focusing on central bank digital currencies (CBDCs) and stable coins. We develop an innovative approach for generating fair exchange rates for on-chain assets consistent with traditional off-chain markets. We illustrate the efficacy of our approach on realized FX rates for G-10 currencies.

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