Forty Banks Partner with Seven Central Banks to Improve Cross-Border Payments

Forty of the world’s top commercial banks have collaborated with central banks to develop a new digital currency platform aimed at accelerating and improving cross-border payments.

The Agora Project is led by the Bank of International Settlements (BIS) and the Institute of International Finance (IIF).

It includes global banks like JPMorgan, HSBC and UBS and central banks from France, Japan, Mexico, South Korea, Switzerland and England as well as the Federal Reserve Bank of New York.

The main goal of the project is to explore how to improve the speed and integrity of cross-border payments within the two-tiered banking system, as well as the functions of commercial bank money (deposits) and central bank money (reserves with central banks) for wholesale transactions.

Specifically, it will investigate in a controlled environment how tokenized commercial bank deposits can be seamlessly integrated with central bank digital currencies in a faster and more advanced financial platform.

It will also focus on wholesale central bank digital currencies, which are exclusively between banks rather than by the public, to address challenges related to different time zones, legal requirements as well as regulatory and technical systems.

The aim is to enhance the functioning of the monetary system and provide new solutions using smart contracts and programmability, while maintaining the two-tier banking structure.

In May, the BIS and IIF first invited central banks and commercial banks to join Project Agora, aiming to unite a diverse group of regulated financial institutions with a significant role in wholesale cross-border payments. Now that the group has reached its quota, the design phase of the project will begin.