Central Banks and BIS Launch Project to Explore Cross-Border Payment Tokenization
The Bank for International Settlements (BIS), alongside seven central banks, has launched an extensive project to explore the tokenization of cross-border payments.
Representing the Eurosystem, the central banks involved are the Bank of France, the Bank of Japan, the Bank of Korea, the Bank of Mexico, the Swiss National Bank, the Bank of England, and the Federal Reserve Bank of New York. They plan to collaborate on the project, named Agorá (Greek for ‘marketplace’), in conjunction with a large group of private financial firms convened by the Institute of International Finance (IIF).
The project, which builds upon the unified ledger concept proposed by the BIS, aims to investigate how tokenized commercial bank deposits can be integrated with tokenized wholesale central bank money in a public-private programmable core financial platform.
This initiative will utilize smart contracts to enable new settlement methods and unlock transaction types that are currently unfeasible or impractical.
The BIS states that the project aims to overcome several structural inefficiencies in current payment processes, particularly across borders, by addressing different legal, regulatory, and technical requirements, as well as operating hours and time zones.
Additionally, the initiative will address the increased complexity of conducting financial integrity controls against money laundering and customer verification. These processes are often repeated several times for the same transaction, depending on the number of intermediaries involved.
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If successful, the project has the potential to replace the banking cooperative Swift by connecting central banks for cross-border payments with zero settlement risk.
Cecilia Skingsley, head of the BIS Innovation Hub, describes Agorá as the most ambitious project yet to be undertaken by central banks, stating, “We believe that tokenization is the next frontier in terms of the digitalization of money and payment.”
The BIS intends to issue a call for expressions of interest from private sector financial institutions representing each of the seven currencies to participate in the project.
Alexander Stefanov
Reporter at CoinsPress
Alex is an experienced finance journalist and a cryptocurrency and blockchain enthusiast. With over five years of experience covering the industry, he deeply understands the complex and constantly evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His passionate approach allows him to break down complex ideas into accessible and insightful content. Follow up on his content to be up to date with the most important trends and topics - stay ahead of the curve with CoinsPress.
