The Bank for International Settlements (BIS) has announced that more than 40 financial firms will be joining its central bank group to explore how tokenization can enhance wholesale cross-border payments in Project Agorá.
The BIS, often referred to as the central bank for central banks, will be looking into combining wholesale central bank money with tokenized commercial bank deposits. This initiative aims to leverage tokenization technology to streamline and improve cross-border payments.
Following a public call for participation in May, the BIS has selected over 40 financial firms to participate in Project Agorá. The project will now move into the design phase, where the participants will work together to explore the potential benefits of tokenization in wholesale cross-border payments.
Tokenization involves the digitization of real-world assets, and many countries have been exploring ways to leverage this technology. Project Agorá, launched by the BIS in April, brings together seven monetary authorities from around the world to collaborate on this initiative.
The project will investigate how tokenized commercial bank deposits can be seamlessly integrated with tokenized wholesale central bank money in a public-private programmable financial platform. This partnership seeks to address structural inefficiencies in cross-border payments, including differences in legal, regulatory, and technical requirements, as well as varying operating hours.
By overcoming these challenges, the BIS aims to create a more efficient and seamless cross-border payment system. This initiative represents a significant effort to modernize and improve the way payments are made on a global scale.
In conclusion, Project Agorá is a groundbreaking collaboration that has the potential to revolutionize cross-border payments using tokenization technology. By bringing together financial firms and central banks, this initiative aims to create a more efficient and streamlined payment system for businesses and individuals around the world.