A consortium of 28 banks has piloted a $1 million project using tokenized money for cross-border payments, improving efficiency and traceability.
A consortium of 28 prominent banks has successfully completed a $1 million pilot project demonstrating cross-border payments utilizing tokenized money.
Collaboration Among Major Financial Institutions
Initiated by the Bank for International Settlements (BIS), the pilot featured industry giants such as JPMorgan, Citi, and UBS, facilitating transactions across six currencies.
Dubbed Project Agorá, this initiative processed around $1 million (CHF 800,000) in real transactions, employing tokenized reserves from central banks and deposits from commercial banks. The currencies used included the U.S. dollar, euro, British pound, Japanese yen, Swiss franc, and South Korean won.
The pilot achieved payment settlements in an average of just 80 seconds via a shared ledger system, significantly enhancing transaction traceability while integrating with current payment infrastructures.
Streamlining International Payments
Project Agorá aims to innovate the global money transfer system by investigating the potential of tokenized traditional bank money. Unlike private stablecoins, this project centers on tokenizing central bank reserves and commercial bank deposits.
In contrast to the conventional method of cross-border payments that involves several correspondent banks with separate records, this pilot utilized a unified ledger for tokenized money. This approach allowed banks to share one record for ownership and payment status, simplifying the payment process.
Additionally, the project enabled simultaneous foreign exchange transactions, allowing two currencies to be exchanged concurrently, thus reducing the risk of one party sending funds without receiving the appropriate currency in return. Participating banks noted that the platform significantly improved payment tracking throughout the transaction process.
As the financial industry increasingly embraces tokenization, Project Agorá stands out as a key initiative where central banks and commercial entities explore how digital currencies could reshape the core elements of global finance.
