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), along with the central banks of France, Japan, South Korea, Mexico, Switzerland, the United Kingdom, and the United States Federal Reserve Banks, have teamed up 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," BIS wrote, adding:
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.
