A consortium of seven central banks has partnered with the Bank for International Settlements (BIS) to delve into the potential of tokenization for facilitating cross-border payments.
These central banks intend to collaborate with private sector entities in Project Agorá, an initiative aimed at exploring how tokenization of wholesale central bank money and commercial bank deposits on programmable platforms could enhance the efficiency of the monetary system.
Project Agorá builds upon the unified ledger concept proposed by the BIS last year. Its primary focus is to investigate the seamless integration of tokenized commercial bank deposits with tokenized wholesale central bank money within a public-private programmable core financial platform.
According to the BIS, such integration could lead to improvements in the monetary system's functionality and offer innovative solutions utilizing smart contracts and programmability, all while preserving its existing two-tier structure.
The overarching objective of Project Agorá is to expedite international payments and bolster their integrity, all while reducing associated costs.
Participating in this endeavor are the Bank of France, Bank of Japan, Bank of Korea, Bank of Mexico, Swiss National Bank, Bank of England, and the Federal Reserve Bank of New York. They will collaborate with a substantial cohort of private financial firms convened by the Institute of International Finance.
Cecilia Skingsley, Head of the BIS Innovation Hub, expressed the project's ambition, stating, "In Project Agorá, we aim to explore a new shared payment infrastructure capable of harmonizing various payment systems, accounting ledgers, and data registries. This initiative could potentially enhance the overall efficiency of the system by establishing a digital core financial infrastructure."
Skingsley emphasized that the project will not only assess the technological aspects but will also evaluate its operational, regulatory, and legal implications within the contexts of the participating currencies and the financial institutions operating within them.
