BIS Project Agorá finds tokenization speeds cross-border payments
In brief
- Project Agorá combines BIS, 7 central banks, and 40+ private firms to test tokenized cross-border payments
- Atomic settlement on blockchain rails reduces failed transactions and settlement delays globally
- Real-value testing now underway following Bank of Canada's participation this week
The problem tokenization solves
Cross-border transfers can bounce between several intermediary banks before reaching their destination, often taking days to settle and creating operational risks. A BIS experiment found that tokenization could help fix pain points in cross-border payments, from slow settlement times to costly reconciliation between banks.
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. It's the core mechanic that makes blockchain settlement attractive to central banks and financial institutions.
"Using tokenization and blockchain rails could mean fewer delays and failed payments in the global financial system, the report showed."
Moving beyond simulation
Project Agorá participants now plan to move beyond simulations toward testing real-value transactions involving some currencies and institutions. The Bank of Canada joined the initiative this week. The group includes 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.
The BIS isn't alone in this space. DTCC, Wall Street's clearing house, plans to roll out its tokenized settlement infrastructure for stocks, ETFs and U.S. Treasuries. Nasdaq and NYSE-owner Intercontinental Exchange are both developing blockchain-based systems for tokenized stocks.
The BIS's wider shift
The BIS, often described as the "central bank for central banks," has become increasingly active in blockchain and tokenization research as governments and financial firms rethink how money and securities move globally. That said, the agency has also warned about risks. The BIS warned that stablecoins could pose risks to the financial system and urged regulators to speed up efforts in the sector.
The gap between tokenized central bank money (which Project Agorá is testing) and privately-issued stablecoins (which the BIS views with caution) reflects a broader institutional push: central banks want to control the rails, not cede them to private firms.
