Written by Lee Kyung-min
The Bank of Korea announced on Wednesday that central banks and commercial financial institutions from seven economies, as well as the Bank for International Settlements (BIS), will explore tokenizing cross-border payments through Project Agora, a public-private partnership.
South Korea’s inclusion on the list of global financial standard-setting bodies is a recognition of the IT powerhouse’s achievements in central bank digital currency (CBDC) research on tokenized deposits. This feat is expected to lead to further opportunities for South Korean private financial institutions and business entities in a wide range of areas of digital finance, including trade finance.
BIS project covering five key monetary economies explores how the speed and integrity of international payments can be improved at low cost by tokenizing wholesale central bank funds and commercial bank deposits on a programmable platform Consider whether
They include the Bank of Korea, Bank of France, Bank of Japan, Bank of Mexico, Swiss National Bank, Bank of England, and Federal Reserve Bank of New York. They will work in conjunction with a large group of private financial companies convened by the Institute of International Finance (IIF).
The project is built on the concept of a new type of financial market infrastructure, the unified ledger, proposed by BIS, which allows central bank funds, tokenized deposits and assets to be managed on a programmable platform. You can maximize the benefits of tokenization through a combination.
The partnership aims to overcome structural inefficiencies across borders, such as differences in legal, regulatory and technical requirements, as well as differences in business hours and time zones.
It also enhances faster detection of money laundering attempts and customer authentication. These processes remain time-consuming and expensive due to the deep involvement of numerous intermediaries.
Participants aim to establish a prototype system, the final step before actual trading becomes possible.
BIS Economic Advisor and Research Director Shin Hyun-sung said that tokenization combines the record-keeping functions of traditional databases with the rules and logic that govern remittances.
“Project Agora aims to improve existing capabilities and enable new capabilities, based on the proven foundations of a central bank-centered two-tier monetary system,” he said.
“These capabilities are achieved without sacrificing safeguards for the integrity and governance of the monetary system.”