The Bank for International Settlements (BIS) plans to launch a tokenization project next year. The project aims to develop a proof of concept (PoC) for a tokenized digital promissory bill platform. It will be implemented in collaboration with the World Bank and the Swiss National Bank. In addition, the BIS is interested in the preservation of privacy for users of CBDC (Central Bank Digital Currency).
BIS embraces tokenization of promissory notes
Financial institutions’ interest in blockchain continues to grow. Indeed, in its work program for the year 2024, the Bank for International Settlements (BIS) has announced the launch of six new projects. One of these will be dedicated to the tokenization of assets. Called Promissa the asset tokenization project will be implemented by the Bank for International Settlements (BIS), the World Bank and the Swiss National Bank under the observation of International Monetary Fund (IMF).
The Promissa project aims to develop a proof of concept (PoC) for a tokenized digital promissory bill platform, with the aim of simplifying and verifying bill management. The 3 financial institutions do not intend to stop there with the tokenization project. In the future, the project could extend to tokenized payments associated with these bills.
The Bank for International Settlements (BIS) hopes to have the Promissa project ready by early 2025. At that point, any government could use it to obtain a complete overview of all banknotes in circulation from international financial institutions. The latter, in turn, will have uniform visibility of the banknote prices held by the various central banks.
The CBDC is of interest to the Bank for International Settlements
In addition to the tokenization of assets, the BIS plans to launch another blockchain-related project. As part of the Aurum project, it plans to study the privacy of payments with a CBDC. The aim is to push banks to better protect user privacy in the design of CBDC-based systems.
As a reminder, the Central Bank Digital Currency (CBDC) is a digital version of a national currency. Issued and controlled by a state, CBDC carries risks for the freedoms of its users. In the USA, senators, governors…, consider the CBDC a privacy risk.
Will the Bank for International Settlements (BIS) be able to resolve the CBDC confidentiality issue? In any case, it’s not clear that central banks will agree to give up the advantage of the citizen control offered by the CBDC.
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