BIS Global ‘Finternet’ works on integrated accounting technology

The Bank for International Settlements has so far presented its most complete and robust argument for integrated ledger technology in a paper written by BIS chief Augustin Carstens. The paper describes a “financial system of the future” that uses unified ledgers as a vehicle, which it calls “Finternet”.

A BIS paper states that integrated ledgers can improve speed, compliance and privacy in the financial system and eliminate many pain points in the current financial system. Consolidated ledgers “bring multiple financial asset markets […] Objects that can be implemented on common programming platforms. This flexibility offers many advantages over digital transactions on other platforms:

“Even when individuals use sophisticated front-end interfaces to conduct so-called ‘digital' transactions, behind-the-scenes transactions of funds and other financial assets often rely on the owners of hidden proprietary databases to initiate and process transfers.”

Consolidated ledgers “combine all the components needed to complete financial transactions – financial assets, ownership records, regulations governing their use and other relevant information – in one place.” This gives them the ability to overcome issues related to technical standards and management and avoid third-party messaging systems.

Related: SWIFT hints at future role in integrated ledger

However, BIS does not have a uniform ledger. Instead, multiple integrated ledgers interact with each other and with applications from the financial system beyond the Internet. Unified ledgers require the tokenization of assets, especially money, using smart contracts. The proposal creates a token manager role that oversees regulatory requirements.

Carstens introduced the concept of a consolidated ledger in February 2023. The topic is raised again in the 2023 BIS Annual Report. The recently announced Project Agoram makes heavy use of Unified Ledger. The BIS and seven central banks are participating in that project, which includes central bank digital currency and remittances.

The proposal has been considered by SWIFT, the global financial messaging service. The International Monetary Fund's proposed XC platform is also very similar in many details.

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