The Bank for International Settlements (BIS) recently introduced an innovative initiative called Project Agorá, in collaboration with a consortium of private financial institutions. This initiative aims to combine tokenized central bank money and commercial bank deposits onto a unified, programmable platform. Seven monetary authorities from various regions, including the U.K., Japan, South Korea, Mexico, Switzerland, New York, and Europe, are partnering with private financial firms to address challenges in cross-border payments stemming from differing legal, regulatory, technical frameworks, operational hours, and time zones. The project’s primary focus is to enhance the speed and integrity of cross-border payments while reducing costs.
The BIS plans to issue detailed instructions and requirements for participation in Project Agorá, providing a grace period for private banks to join the collaboration. The project aims to explore seamless integration between tokenized commercial bank deposits and wholesale central bank money within a public-private programmable financial platform. Smart contracts, prevalent in the cryptocurrency sector, will facilitate automatic transaction execution, enriching the monetary system’s functionality and offering innovative solutions while preserving the two-tier structure. Tokenization, the digitization of real-world assets into tokens, has garnered interest worldwide, with financial institutions increasingly exploring its potential to revolutionize the financial sector.
HSBC, a prominent financial institution, recently ventured into gold tokenization for investors in Hong Kong. The market value of tokenized U.S. Treasury notes on public blockchains exceeded $1 billion for the first time in March, indicating increasing adoption of tokenization technology. Cecilia Skingsley, Head of the BIS Innovation Hub, emphasized the project’s focus on developing a more efficient payment infrastructure to unify various payment systems. Through Project Agorá, the BIS envisions practical usability and meaningful impact by leveraging existing infrastructure, inviting private financial institutions to participate in the initiative to revolutionize cross-border payments and enhance market efficiency.
The BIS’s work program for the year encompasses six new projects focusing on cybersecurity, fighting financial crime, central bank digital currencies (CBDCs), and green finance. Project Promissa, a collaboration between the BIS, the Swiss National Bank, and the World Bank, seeks to develop a proof-of-concept platform for digital tokenized promissory notes. The BIS has been advocating for CBDCs throughout 2023 while expressing concerns about stablecoins, with Agustín Carstens, the BIS’s general manager, urging central banks worldwide to lead digital innovation with CBDCs at the forefront. The BIS aims to test Project Agorá within the specific operational, regulatory, and legal conditions of participating currencies, collaborating with financial companies operating in these regions to ensure the technology’s effectiveness in real-world scenarios.
In partnership with the Bank for International Settlements (BIS), a consortium of central banks globally, representing 63 institutions, have launched “Project Agorá” to explore the potential of tokenization in enhancing financial systems. This initiative aims to combine wholesale tokenized versions of central bank money and commercial bank deposits onto a unified, programmable platform. By addressing challenges in cross-border payments arising from differences in legal, regulatory, technical frameworks, operational hours, and time zones, Project Agorá seeks to increase payment speed, integrity, and cost-efficiency. The integration of smart contracts within this platform is expected to revolutionize transaction execution and offer innovative solutions while maintaining the existing two-tier structure of the monetary system. As tokenization gains traction in the financial sector, with the digitization of real-world assets into tokens, the BIS and participating monetary authorities aim to leverage this technology to enhance market efficiency and redefine cross-border payments.
The BIS’s Project Agorá, in collaboration with private financial institutions, strives to enhance cross-border payments and market efficiency by integrating tokenized central bank money and commercial bank deposits onto a unified, programmable platform. With monetary authorities from various regions partnering with private firms, the project aims to explore seamless integration between tokenized assets and smart contracts for automatic transaction execution. The BIS’s work program for the year includes projects focused on cybersecurity, fighting financial crime, CBDCs, and green finance, with a particular emphasis on developing a proof-of-concept platform for digital tokenized promissory notes through Project Promissa. As the market embraces tokenization technology, with the value of tokenized U.S. Treasury notes surpassing $1 billion, financial institutions are increasingly exploring its potential to revolutionize the sector. By leveraging existing infrastructure and inviting private financial institutions to participate in Project Agorá, the BIS aims to drive practical usability and meaningful impact in enhancing payment infrastructure and market efficiency.
