BIS-Led Study Finds Tokenization Could Enhance Cross-Border Payments

A recent study led by the Bank for International Settlements (BIS) suggests that tokenization technology could significantly improve settlement speed and reconciliation efficiency in cross-border payments, while reducing transaction failures and operational risks. According to Odaily, the project, named Project Agorá, involves collaboration between BIS, seven central banks, and over 40 financial institutions, including the New York Fed, Bank of England, Bank of Japan, and Swiss National Bank. The research indicates that tokenizing central bank reserves and commercial bank deposits could facilitate 'atomic settlement' across currencies and jurisdictions, ensuring transactions either complete or fail simultaneously. This approach aims to mitigate credit and execution risks commonly associated with cross-border payments. Project Agorá has completed its simulation testing phase and plans to advance to the 'real-value transaction' testing phase. This next stage will explore the application of on-chain settlement for certain currencies and institutions in a real-money environment.