The Bank for International Settlements (BIS) is an international financial institution that acts as a central bank for central banks, helping to promote global financial and monetary stability. Founded in 1930, it facilitates cooperation among central banks, provides a platform for discussion on key economic issues, and conducts research that influences global financial policies. The BIS also plays a crucial role in shaping global banking regulations, such as the Basel Accords, and provides financial services to central banks, helping to manage risk and ensure global financial stability.
On September 16, 2024, the Bank for International Settlements (BIS) announced that more than 40 private sector financial firms would join Project Agorá, a blockchain-based initiative designed to improve wholesale cross-border payments. The selected companies, which include industry leaders such as JPMorgan Chase & Co., Deutsche Bank AG, Visa, and Mastercard, were convened by the Institute of International Finance (IIF) and will collaborate with seven central banks, including the Federal Reserve Bank of New York, the Bank of England, and the Bank of Japan, among others.
The Agorá project, launched by the BIS in May 2024, aims to explore how tokenization (the process of transforming traditional financial assets into digital tokens that can be exchanged on a blockchain) can improve the speed, transparency and security of international payments. The main objective of the project is to establish a unified ledger that integrates tokenized commercial bank deposits with central bank digital currencies (CBDCs), thus providing a more efficient alternative to traditional correspondent banking systems.
According to the BIS, tokenized assets, such as commercial bank deposits and CBDCs, are at the heart of the project. Tokenized commercial bank deposits represent a digital form of traditional bank accounts backed by reserves and traded using blockchain technology. CBDCs, on the other hand, are digital currencies issued by central banks, enabling secure and nearly risk-free cross-border transactions. Both types of tokenized assets could streamline cross-border financial transactions and reduce operational risks, according to the BIS.
The private companies joining the project bring diverse expertise in cross-border payments, blockchain technology, and financial innovation. According to the BIS, the addition of these companies marks a crucial step in the development of the Agorá project, as they help central banks design a programmable platform that enables the seamless integration of tokenized assets. This platform is expected to use smart contracts to automate the processing and settlement of payments, reducing the need for intermediaries and transaction costs.
As the BIS explains in its FAQ guide on the Agorá project, the goal is to create a unified platform that maintains the current two-tier structure of the global financial system – where central banks issue currency and commercial banks act as intermediaries – while incorporating the benefits of blockchain technology. This new system could significantly improve the speed and efficiency of cross-border payments, addressing long-standing problems such as high fees and long processing times, the BIS notes.
The project is currently in the design phase, and the BIS expects a final report by the end of 2025. According to the FAQ guide, this report will present the technical prototype, as well as potential legal and regulatory challenges in each of the participating jurisdictions. The findings of the Agorá project could lay the foundation for a future blockchain-based global payment system that will reduce operational friction and enable programmable financial transactions across borders.
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