CaixaBank, ranked as Spain’s third-largest bank by market capitalization, has been chosen to take part in a worldwide effort aimed at revolutionizing international payment systems through the use of tokenization and smart contracts.
This initiative, known as Agorá, is spearheaded by the Bank for International Settlements (BIS) in collaboration with the Institute of International Finance (IIF).
The project brings together central banks and private sector companies to investigate how tokenization—the digital representation of assets on programmable platforms—can improve wholesale cross-border payment processes.
Agorá, derived from the Greek term for “marketplace,” involves seven central banks and selected private sector participants exploring ways to enhance wholesale cross-border transactions through tokenization. The focus lies on integrating tokenized deposits from commercial banks with tokenized wholesale central bank currency on a programmable financial platform.
Exploring Tokenization and Smart Contracts
Within the Agorá initiative, researchers will examine how to combine tokenized commercial bank deposits with tokenized wholesale central bank funds on a collaborative, programmable core financial platform. This strategy aims to potentially streamline the monetary framework while preserving its dual-tier system.
The project addresses numerous inefficiencies present in current payment mechanisms, particularly concerning cross-border dealings. Key issues include differences in legal and regulatory standards, operational hours, and time zone challenges across various jurisdictions.
Additionally, the project plans to evaluate financial integrity measures, including anti-money laundering (AML) protocols and customer verification systems. At present, these safeguards are often redundantly applied multiple times for a single transaction, influenced by the number of intermediaries involved.
This collaboration between the public and private sectors aspires to rectify several fundamental inefficiencies plaguing the global payment ecosystem. These include inconsistent legal and regulatory frameworks, diverging operational schedules due to time zone differences, and the complexities associated with maintaining financial integrity, such as AML regulations and customer verification measures.
Participating in the venture are seven central banks: the Bank of France (representing the Eurosystem), the Bank of Japan, the Bank of Korea, the Bank of Mexico, the Swiss National Bank, the Bank of England, and the Federal Reserve Bank of New York. The IIF will serve as the coordinator for private sector involvement.
