Source: Cointelegraph
The proof-of-concept projects seek to create a centralized platform for cross-border CBDC payments and tokenized money transfers.
The Bank for International Settlements (BIS) has teamed up with the central banks of France, Japan, South Korea, Mexico, Switzerland, the United Kingdom and the United States Federal Reserve Banks to explore asset tokenization within the monetary system alongside private financial institutions.
Dubbed “Project Agora,” the initiative will build on a unified ledger concept proposed by BIS that bridges tokenized commercial bank deposits and tokenized wholesale central bank money. “This could enhance the functioning of the monetary system and provide new solutions using smart contracts and programmability while maintaining its two-tier structure,”.
“This major public-private partnership will seek to overcome several structural inefficiencies in how payments happen today, especially across borders, which add a layer of challenges: different legal, regulatory and technical requirements, operating hours and time zones.”
Specific instructions and requirements will be issued in due course, with a grace period for private banks to sign up for the partnership. Hyun Song Shin, BIS’ economic adviser and head of research, commented that “tokenization combines the record-keeping function of a traditional database with the rules and logic that govern transfers” within a central bank framework.
Meanwhile, Cecilia Skingsley, head of BIS Innovation Hub, spoke of a “common payment infrastructure” that allows payment systems, accounting ledgers, and data registries to be interoperable across digital currencies.
BIS has taken a keen interest in recent crypto innovations tied to financial centralization. On Jan. 23, the BIS Innovation Hub added six new projects exploring the issues of cybersecurity, fighting financial crime, central bank digital currencies and green finance. Another area of exploration is the organization’s Project Promise, which is a collaboration between BIS, the Swiss National Bank, and the World Bank to build a proof-of-concept platform for tokenized promissory notes.
