Preface

Context:

The Bank for International Settlements (BIS) recently led a collaborative pilot that demonstrated how tokenized forms of traditional bank money can be used to settle real cross‑border payments. This article explains the pilot’s purpose, what was tested, and why the results matter for the future of international payments. The trial brought together central banks and major commercial banks to assess whether tokenization can improve speed, traceability, and risk management while operating alongside existing payment systems.

Lazy bag

Summary: The BIS‑led Project Agorá processed roughly $1 million in real-value cross‑border transfers using tokenized central bank reserves and tokenized commercial deposits across six currencies. Transactions — including simultaneous foreign‑exchange settlements — completed in around 80 seconds on a shared ledger, improving traceability and offering a model to reduce cost and settlement risk while coexisting with current infrastructures.

Main Body

The Bank for International Settlements organized a practical, multi‑jurisdictional experiment to test whether tokenization of traditional bank money can play a meaningful role in cross‑border payments. Project Agorá included participation from five central banks and 28 commercial banks, among them some of the largest global lenders. Over the course of the test, participants executed about 30 real‑value transactions totalling approximately $1 million (CHF 800,000), spanning six currencies: the U.S. dollar, euro, British pound, Japanese yen, Swiss franc and South Korean won.

Unlike private stablecoins that are issued by non‑sovereign entities, the pilot focused on tokenizing two established forms of bank money: central bank reserves — the accounts commercial banks hold at their central bank — and commercial bank deposits held for customers. These tokenized instruments were placed onto a shared ledger that multiple banks could access. The shared record created a single authoritative view of ownership and payment status, enabling participants to observe the lifecycle of a payment without relying on a chain of correspondent bank records.

One notable capability demonstrated was simultaneous foreign exchange settlement. Traditional cross‑border FX transactions often expose participants to settlement risk, because one leg of an exchange might settle before the other, leaving a counterparty temporarily exposed. In the pilot, counterparties could exchange two currencies in a single coordinated operation on the shared ledger so that both legs settled together. This atomic or synchronized settlement model reduces the chance of one side fulfilling its obligation while the other does not.

Performance in the prototype was encouraging: transactions settled in roughly 80 seconds on average. That speed was achieved even though the experimental platform did not have direct integrations with participants’ existing domestic payment infrastructures. The result suggests that tokenized representations of central bank and commercial bank money can support real‑time or near‑real‑time settlement in a cross‑border context when built on a purpose‑designed ledger.

Beyond speed, the pilot highlighted improvements in traceability and operational transparency. With tokenized balances on a shared ledger, banks could follow a payment’s status from initiation to final settlement — useful for reconciliation, compliance checks, and fraud detection. The single shared record reduced the need for repeated bilateral reconciliation across correspondent chains, potentially lowering operational costs and errors.

Importantly, the BIS framed Project Agorá as complementary to current systems rather than a wholesale replacement. The prototype was designed to interoperate with existing corridors and rails, showing how tokenization could be introduced progressively into the plumbing of global finance. This incremental approach matters because wholesale replacement of entrenched payment infrastructures would be costly and disruptive; a layered model makes adoption more feasible.

The pilot also sits amid broader market developments. Private sector stablecoins and tokenized investment vehicles have gained traction for cross‑border transfers and corporate treasury use cases, and asset managers have begun issuing tokenized funds. Project Agorá’s tests differ in that they are centered on tokenizing central‑bank and commercial‑bank money — assets that already serve as the foundation of financial settlement — which could increase regulatory comfort and systemic reliability compared with unbacked or privately issued tokens.

Nevertheless, challenges remain. Technical interoperability, legal clarity about tokenized claims, governance of shared ledgers, and integration with regulatory reporting and anti‑money‑laundering frameworks are non‑trivial hurdles. Central banks and commercial participants will need to address questions about custody, finality of settlement, cross‑jurisdictional legal enforceability, and how to scale prototypes into production‑grade systems. The pilot provides evidence that the technology can work but does not resolve these broader policy and operational issues.

Project Agorá contributes to an expanding set of wholesale tokenization efforts that aim to modernize the infrastructure underpinning global markets. By demonstrating synchronized FX settlement and a shared ownership record for tokenized central‑bank reserves and deposits, the pilot provides a concrete example of how tokenized forms of traditional money could help reduce settlement risk, accelerate finality, and improve transparency in cross‑border flows. For market participants and policymakers, the experiment offers both technical proof of concept and a roadmap of topics that require further work before large‑scale deployment.

Conclusion:

The BIS pilot indicates that tokenization of existing bank money can materially enhance cross‑border payment processes. While promising, the approach requires coordinated policy, legal frameworks, and technical standards to realize broad adoption. Project Agorá is a step toward modernizing global payment plumbing — not the final blueprint, but a practical demonstration that tokenized wholesale money can settle real transactions efficiently and transparently.

Key Insights Table