In April 2024, the Bank for International Settlements (BIS), in partnership with seven
central banks and private industry firms, announced a pilot program to explore the
potential that tokenization, smart contracts, and “programmable platforms” have to
offer traditional monetary systems and financial infrastructure.
This collaboration, named Project Agora, will build on a BIS proposal of a “unified
ledger” aimed at streamlining a wide range of financial activity. The BIS and its
affiliates examine how “unified ledgers,” or blockchain ecosystems, carry the
potential to link previously separate systems in an instantaneous and secure way. In
short, the objective for Agora goes beyond a simple exploration of tokens and
transacting monies but on building a better and more efficient infrastructure that
focuses on interoperability.
This is not the first venture into digital assets and blockchain technology for the BIS,
as they are also involved in a number of central bank digital currencies (CBDC)
projects. Some of the more significant collaborations include Project Aurum, with
the Hong Kong Monetary Authority, Project Promissa, with the Swiss National Bank
and World Bank, and Project mBridge, with the People’s Bank of China for their
native CBDC.
While the legality behind existing tokens and public blockchain ecosystems remains
ambiguous, financial institutions are recognizing the opportunities and utility for
digitized technology. Such heavy interest from central banks represents a shift
occurring in fintech and indicates how it will shape the future of the financial system.