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The Bank for International Settlements (BIS), which is known as the bank of central banks, has made a significant announcement about Project Agorá. This joint venture aims to investigate the ways in which tokenization might improve cross-border settlements.
The BIS, which is renowned for promoting global collaboration between central banks, has launched Project Agorá to investigate the potential of tokenization in addressing the limitations of current monetary systems.
Project Agorá boasts the involvement of seven central banks: 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. Additionally, private institutions selected by the Institute of International Finance (IIF) will join this collaborative effort in due course.
The primary focus of Project Agorá will be on experimenting with tokenized deposit-backed products and wholesale central bank digital currencies (CBDCs) to streamline cross-border settlements. Through this exploration, the BIS aims to evaluate whether this two-tiered mixed structure can enhance the efficiency of the monetary system, leveraging smart contracts and programmability.
The initiative’s goals were highlighted by BIS Economic Adviser and Head of Research Hyun Song Shin, who said, “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.”
A portion of the BIS’s “unified ledger” approach, which calls for a decentralized ledger combining tokenized deposits, central bank money, and other tokenized assets, being put into practice by Project Agorá. With this strategy, features that are now impeded by the limitations of the current monetary system should become accessible.