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How Project Agora is Set to Revolutionise Global Transactions

The important of cross-border payments cannot be underestimated. They are essential for facilitating international trade, promoting economic growth, supporting globalisation and enhancing financial inclusion, driving innovation. Combined, these factors contribute to a more dynamic and interconnected global economy. 

With this in mind, the launch of Project Agorá from the Bank for International Settlements (BIS) is a significant and positive step forward. Underscoring the importance of collaboration between central banks and the private sector, it has the potential to transform cross border payments and the wider monetary system. 

Project Agorá; an overview 

Named after the Greek word for ‘marketplace, Project Agorá is led by seven central banks, including the Bank of France, Bank of Japan, and Bank of England. It was created to explore how tokenization of wholesale central bank money and commercial bank deposits on programmable platforms can improve the monetary system and reshape global transactions.   

It’s launch follows the successful conclusion of BIS’ Project Mariana in late 2023, which explored the cross-border settlement capabilities of wholesale central bank digital currencies (CBDCs), and builds on the BIS’ “unified ledger” model announced the same year, which proposes a structure where tokenized deposits, central bank money, and other tokenized assets are available in one decentralized ledger. 

Working with private financial firms, the seven central banks running Project Agorá seek to integrate tokenized commercial bank deposits with wholesale central bank money in a programmable core financial platform. 

This would produce functionality as yet unavailable today due to the current structure of the monetary system and its controls. 

What it means for the financial industry  

Although the current monetary system function adequately, it’s not without its flaws. The reliance on commercial correspondent banks, compliance expenses, regulatory differences and varying operating hours in different time zones all cause friction and force higher costs on businesses. 

That’s why this project is an exciting prospect for the industry, specifically when it comes to traditionally challenging cross-border payments and improving the monetary system's current functionality. It means:

  • Significant transformations with innovative technologies like DLT and tokenization sweeping away the high fees and slow settlement that have typically afflicted cross-border payments.
  • Instant, programmable transactions using smart contracts, so settlement delays can be eliminated, and money can get where it needs to be much faster and more securely.
  • Smart contracts to enable new ways of settlement, such as automated escrow releases or interest rate adjustments based on pre-defined conditions.
  • Central bank digital currencies which promise to provide a trusted foundation for tokenized transactions. Because the central bank is the issuer of the CBDC, businesses can depend on built-in safeguards, and the assurance that money will always be available.
  • Unified ledgers for seamless integration. By breaking down silos and segregated ledgers, transactions can be enabled across different asset classes on a single platform, while tokenized deposits within the existing system preserve the "singleness of money" while adding flexibility for banks.  
  • Enhanced security, as tokenized assets reside on secure, tamper-proof ledgers, reducing the risk of fraud and unauthorized access.
  • Easier regulatory compliance. Tokenization enabling streamlined compliance, as compliance measures are embedded within smart contracts. This not only automates adherence to regulations but also creates auditable compliance trails, providing transparency in regulatory processes. 

Project Agorá reaffirms the shift taking place in the broader financial and payment spaces – where traditionally established incumbents and challengers have battled each other for market share, competition is gradually giving way to collaboration. 

What’s even more remarkable about this initiative is the giant leap forward in public-private partnerships it represents. This unprecedented level of cooperation recognises that working together rather than in isolation is the best way to produce the greatest benefits, and reshape the monetary system in a way that works better for everyone.

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