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The Bank for International Settlements (BIS), along with seven central banks, has initiated a significant project aimed at exploring the tokenisation of cross-border payments.
The participating central banks—Bank of France (representing the Eurosystem), Bank of Japan, Bank of Korea, Bank of Mexico, Swiss National Bank, Bank of England, and the Federal Reserve Bank of New York—will collaborate on the project, named Agorá, meaning ‘marketplace’ in Greek. This endeavor will be conducted in partnership with a consortium of private financial firms convened by the Institute of International Finance (IIF).
Agorá builds upon the unified ledger concept proposed by the BIS and will investigate the integration of tokenised commercial bank deposits with tokenised wholesale central bank money within a public-private programmable core financial platform. Smart contracts will be leveraged to facilitate new settlement methods and enable transactions that are currently impractical or unfeasible.
The primary objective of the project is to address structural inefficiencies prevalent in current payment systems, particularly those associated with cross-border transactions. These inefficiencies stem from varying legal, regulatory, and technical requirements, as well as differences in operating hours and time zones across jurisdictions. Additionally, Agorá aims to streamline financial integrity controls related to anti-money laundering and customer verification, which are often duplicated for the same transaction depending on the number of intermediaries involved.
If successful, the project could potentially revolutionise cross-border payments by establishing a network connecting central banks, thereby minimizing settlement risk.
Cecilia Skingsley, Head of the BIS Innovation Hub, describes Agorá as the most ambitious project undertaken by central banks to date, stating, “We believe that tokenisation represents the next frontier in the digitalisation of money and payments.”
The BIS intends to issue a call for expressions of interest from private sector financial institutions representing each of the seven currencies to participate in the project.
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