The Bank for International Settlements, the central banks’ bank, announced the launch of Project Agorá, a joint private-public initiative seeking to examine the potential benefits of tokenization for improving cross-border settlements. Agorá includes the participation of seven central banks and private institutions to be convened by the Institute of International Finance (IIF).

BIS to Explore Tokenized Money Benefits With Project Agorá

The Bank for International Settlements (BIS), an institution that facilitates international cooperation for central banks, has unveiled Project Agorá, an initiative aiming to explore the possibilities of tokenization for addressing the limitations of today’s monetary systems.

Seven central banks will be involved in Agorá: 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. Complementing the group, private institutions determined by the Institute of International Finance (IIF) will be integrated into this public-private collaboration later.

Project Agorá will focus primarily on testing the utilization of tokenized deposit-backed products, and wholesale central bank digital currencies (CBDC) as vehicles to simplify the burdens of making cross-border settlements. The BIS seeks to assess if this two-tiered mixed structure can “enhance the functioning of the monetary system and provide new solutions using smart contracts and programmability.”

On the objectives of Project Agorá, BIS Economic Adviser and Head of Research Hyun Song Shin stated:

We aim to improve existing capabilities and enable new ones, all based on the proven foundations of the two-tier monetary system with central banks at the core.

Agorá is a practical application of part of BIS’ “unified ledger” model, which proposes a structure where tokenized deposits, central bank money, and other tokenized assets are available in one decentralized ledger. This would enable functionality that is impractical today due to the characteristics of the monetary system and its controls.

Agustin Carstens, BIS’ General Manager, has touted tokenization as the future of the financial system before. In November, he stated that the evolution of the current monetary system “needs wholesale central bank money at its core, complemented by tokenized commercial bank money and potentially other tokenized assets.”

Source : Bitcoin.com / Apr 8, 2024