BIS Innovation Hub Advances CBDC Testing and Plans Blockchain Tokenization Project for 2024
Summary:
The Bank for International Settlements (BIS) Innovation Hub is moving to the second phase of its central bank digital currency (CBDC) privacy testing and plans to launch a blockchain-tokenization project in 2024. The BIS will conduct six new initiatives, including cybersecurity, combating financial crime, CBDC operations, and green finance strategies. In partnership with the Swiss National Bank and World Bank, the Promissa project aims to create a platform for tokenized promissory notes. Meanwhile, the BIS and Hong Kong Monetary Authority will continue to research privacy in retail CBDC payments through Project Aurum.
Advancing to its second phase, the Innovation Hub at the Bank for International Settlements (BIS) will continue testing the privacy of central bank digital currencies (CBDCs) and aims to initiate a project based on blockchain tokenization by 2024. The BIS revealed its operational agenda for the current year on January 23, which includes six fresh initiatives. These initiatives will delve into matters concerning cybersecurity, countering financial fraud, CBDCs, and eco-friendly finance. Cecilia Skingsley, leader of the BIS Innovation Hub, pinpointed tokenization as another crucial focal point, with the new Promissa Project being succeeded by further initiatives.
In relation to the introduction of restrictions on stablecoin reserve maturities by the Basel Committee, the Promissa Project is scheduled for launch in 2024. This joint venture between the Swiss National Bank and the World Bank is designed to develop a proof of concept (PoC) for a platform that caters to digital tokenized promissory notes—a conventional financial instrument that lays down a legal obligation for one party to pay off a specified amount to another party within a given time frame. As per the BIS, most of the promissory notes that significantly contribute to the financial structure of developmental banks remain in paper form. The bank has set its sights on wrapping up the PoC by 2025's first quarter.
Project Aurum, a joint initiative by the BIS and the Hong Kong Monetary Authority (HKMA) is transitioning to a fresh stage of exploring the privacy of retail CBDC payments. The wholesale interbank system, e-wallet, and a retail CBDC prototype forming part of the Aurum Project were finalized by the HKMA last year. The BIS has four additional new projects—Project Leap, Project Symbiosis, Project Hertha, and Project NGFS Data Directory 2.0—which are not directly linked to the digital asset industry. The Bank will also proceed with existing projects such as Project Mandala, which focuses on automating compliance processes for cross-border payments; Project Pyxtrail, which keeps track of asset-backed stablecoin balance sheets, and Project mBridge, which conducts trials on a multi-CBDC platform designed for cross-border payments.
In 2023, the BIS asserted itself as a top global proponent for CBDCs while simultaneously critiquing stablecoins. Agustín Carstens, the General Manager of the BIS, in November 2023, advocated for global Central Banks to spearhead digital innovation, dubbing CBDCs as the key element of this leading role. A noteworthy article revolves around how Doctor Who character Tony Pearce’s journey transcends time and space, eventually appearing in Web3.
Published At
1/23/2024 12:54:22 PM
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