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Major payments players including Visa, Mastercard and Swift are among the private sector participants in the Bank for International Settlements (BIS) tokenisation initiative.
More than 40 private financial institutions have partnered with the BIS and seven central banks to launch Project Agorá.
This initiative, convened by the Institute of International Finance (IIF), aims to explore how tokenisation can improve wholesale cross-border payments.
Among the key private sector participants are global financial giants such as Banco Santander, Deutsche Bank AG, JPMorgan Chase Bank N.A., Citi, and HSBC, alongside major payment service providers such as Mastercard, Visa and Swift.
The participants hail from various parts of the global financial market, including Europe, Asia and North America, but it is Europe that stands out as the region with the most participating firms, including institutions such as Spain’s BNP Paribas, France’s Crédit Agricole CIB and the UK’s NatWest Group.
Asia also plays a significant role, with major players such as South Korea’s KB Kookmin Bank and Woori Bank, as well as Japan’s MUFG.
Project Agorá’s public-private collaboration includes seven central banks, including Banque de France, the Swiss National Bank, Bank of Korea and the Federal Reserve Bank of New York.
The project seeks to leverage digital versions of — otherwise known as tokenised — commercial bank deposits and wholesale central bank money to enhance cross-border payments.
This will use a single system, the unified ledger, as well as automated — or smart — contracts, which are a form of transaction protocol that can create a smoother process.
The work on this initiative will conclude in 2025, and the BIS is hoping that it will revolutionise the financial market infrastructure by offering faster and more transparent payment solutions across borders.
With the potential to streamline regulatory compliance and anti-money laundering efforts, Project Agorá could set the stage for a new era in global finance.
For example, tokenisation on a unified platform could lead to a faster real-time settlement of cross-border transactions, as it would bring down delays and operational issues due to different timezones.
Moreover, a unified ledger could cut transaction costs, compared with the high fees involved in the current system of correspondent banking.
