These 7 countries group up to explore Tokenization
The Bank for International Settlements (BIS) and seven central banks have embarked on a journey to redefine financial systems through tokenization.
Dubbed Project Agora, the initiative represents a significant step forward in the integration of the digital and traditional financial realms. It promises a revolution in financial efficiency and innovation.
How central banks plan to use tokenization
Project Agora derives its name from the Greek word for “marketplace” and combines the powers of the central bank of France, Japan, Korea, Mexico, Switzerland, England and the Federal Reserve Bank of New York.
The Institute of International Finance coordinates this work in partnership with the private sector. It aims to explore tokenized commercial and central bank funds on a unified ledger platform.
The cooperation will also address long-standing inefficiencies in cross-border payments. These include different legal and regulatory landscapes, technical differences and operational challenges created by different time zones.
Moreover, the project seeks to streamline financial integrity controls, such as anti-money laundering and customer verification, which are currently being undermined by multiple intermediaries.
“Smart contracts can enable new ways of dealing and open up types of transactions that are not possible or impractical today, which will provide new opportunities to benefit businesses and people,” BIS wrote.
Meanwhile, HSBC Hong Kong is a pioneer in adopting token technology. Sami Abuzahr, head of wealth management and private banking investments at HSBC, will lead the initiative.
The HSBC token initiative is designed to provide investment avenues in physical and virtual assets. A surge in digital currency experiments from Hong Kong, particularly the digital yuan, aims to improve cross-border payment systems.
Similarly, industry leaders such as BlackRock are realizing the potential of asset tokens. BlackRock CEO Larry Fink predicts a future where every asset class, including ETFs, paves the way for greater trading transparency and efficiency.
Read more: What is Real World Asset (RWA) Token Impact?
Indeed, tokens and digital currencies will redefine economic transactions, ushering in a new era of efficiency and connectivity.
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