BIS project finds tokenization could make cross-border payments faster, safer
Project Agorá, backed by major central banks, will now move toward “real-value” testing to settle tokenized central bank money and bank deposits on blockchain rails.
What to know:
- Project Agorá, backed by the Bank for International Settlements, found that tokenizing central bank reserves and commercial bank deposits could significantly improve the speed and reliability of payments across borders.
- With major central banks like the New York Fed, Bank of England and Bank of Japan involved, members now plan to move from simulations to testing real-value transactions.
- Tokenization is gathering steam among Wall Street firms to modernize finance, bringing assets like stocks, bonds and funds onto blockchain rails.
Atomic settlement refers to transactions completing on an “all-or-nothing” basis, reducing the risk that one side of a cross-border payment fails while the other succeeds.
The initiative involved the Federal Reserve Bank of New York, Bank of England, Bank of Japan, Swiss National Bank and other central banks alongside large commercial banks and financial firms.
Project Agorá participants now plan to move beyond simulations toward testing real-value transactions involving some currencies and institutions. The Bank of Canada also joined the initiative this week.
The findings landed as global banks and asset managers ramp up their own tokenization efforts. DTCC, Wall Street’s clearing house, plans to roll out its tokenized settlement infrastructure for stocks, ETFs and U.S. Treasuries, while Nasdaq and NYSE-owner Intercontinental Exchange are both developing blockchain-based systems for tokenized stocks.
