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Cryptocurrency News Articles
Project Agora Selects 41 Private-Sector Participants to Explore Tokenized Deposits Integration with CBDCs
Sep 20, 2024 at 01:00 pm
The Bank for International Settlements (BIS) has selected 41 private-sector participants to join Project Agora, an initiative that explores how tokenized deposits can be integrated with CBDCs to ease payments and cross-border transfers.
The Bank for International Settlements (BIS) has announced the addition of more than 40 banks and clearing houses to participate in Project Agora, an initiative that aims to integrate tokenized deposits with CBDCs for efficient cross-border fund transfers.
Launched in April 2024 by the BIS in collaboration with seven central banks, Project Agora is the latest effort to explore the tokenization of bank deposits and CBDCs. The project initially involved seven central banks, including the Bank of England (BoE), the Bank of Mexico, and the Federal Reserve Bank of New York.
The initiative will see the participation of some of the world's largest banks, including Citi (NASDAQ: C) and JPMorgan (NYSE: JPM) in the U.S., Sumitomo Mitsui (NASDAQ: SMFG) and MUFG (NYSE: MUFG) in Japan, and HSBC (NYSE: HSBC) and Lloyds Banking Group (NYSE: LLDF) in the U.K. Non-bank participants include Mastercard (NYSE: MA), Swift, Visa (NYSE: V), the SIX Digital Exchange, Monex, and Euroclear.
The participation of banks and clearing houses in Project Agora is being coordinated by the Institute of International Finance, a global financial industry trade group. To be eligible for participation, a company must be regulated in a participating jurisdiction and be significantly involved in cross-border payments.
The project aims to enhance the efficiency of cross-border wholesale fund transfers by exploring the use of tokenized commercial bank deposits, which can be integrated with tokenized wholesale CBDC. This approach seeks to enable all participants in the process, including the central banks and the corresponding banks, to complete all the required steps, such as AML and information checks, at once.
By utilizing smart contracts to automate these processes, the initiative aims to eliminate the possibility of transactions failing after a few stages due to a lack of alignment between the steps completed by different participants. This will also enhance transparency and reduce the risk of errors.
“Smart contracts can enable new ways of settlement and unlock types of transactions that are not viable or practical today, in turn offering new opportunities to benefit businesses and people,” the BIS noted in a statement.
One of the key aims of Project Agora is to unlock cost efficiency and speed by eliminating the need for participants to repeat financial integrity checks, such as AML and customer verification. This will be achieved through the use of smart contracts and a unified ledger, which will provide a common infrastructure for tokenized deposits, CBDCs, and any other form of tokenized currency or asset.
“In Project Agorá, we want to explore a new common payment infrastructure that could bring all these elements together and might make the system work more efficiently together on a digital core financial infrastructure,” Cecilia Skingsley, who heads the BIS Innovation Hub, has explained previously.
The initiative builds upon the concept of a unified ledger, which was proposed by the BIS last year. It provides a common infrastructure where tokenized deposits, CBDCs, and any other form of tokenized currency or asset can interact with the guarantee of settlement finality.
The unified ledger is essentially the BIS’ response to the threat of blockchain technology. In a bid to protect its interests and those of its member banks whose business models could be disrupted by blockchain, BIS seeks to offer a centralized platform that masquerades as an efficient ledger for tokenized assets.
Meanwhile, Qatar has taken a significant step in its efforts to promote blockchain adoption by activating the Digital Assets Lab and welcoming the first batch of participants.
After years of banning digital assets, Qatar has been gradually softening its stance in recent months. A month ago, the Qatar Financial Centre (QFC) revealed that it was exploring asset tokenization in its push for digital finance.
In the latest development, QFC has opened the doors to its Digital Assets Lab and welcomed the first 24 participants. According to CEO Yousuf Mohamed Al-Jaida, this cohort will benefit from QFC's comprehensive support system, enabling them to deploy, test, and commercialize their digital asset solutions.
The initiative will also see the participation of board partners, including Google Cloud (NASDAQ: GOOGL), local lender Masraf Al Rayan, and blockchain consortium R3.
Tokenization is set to be a key focus for the participants in the Digital Assets Lab. With experts indicating that tokenization could unlock up to $16 trillion by the decade’s end, Qatar is among the nations scrambling to play a part in this revolution.
Commenting on the milestone, Al-Jaida highlighted the pivotal role of the participants' efforts in advancing digital asset solutions across the wider Qatari ecosystem.
“The technologies we aim to develop through the Lab will support our goal of creating a resilient and secure financial sector, fostering a thriving wealth management hub, and positioning Qatar at the forefront of innovation,” he said.
Watch: Finding ways to use CBDC outside of digital currencies
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