- Seven central banks and over 40 commercial banks have successfully tested Project Agorá, a platform for instant multi-currency payments.
- The BIS-led system uses tokenised money and shared ledger technology to reduce delays, costs, and settlement risk.
- Further work is needed before the platform is ready for full rollout.
Seven central banks and over 40 commercial banks have participated in a successful prototype of Project Agorá, an initiative to test the feasibility of a multi-currency shared programmable platform.
A report published by the Bank for International Settlements (BIS) on Wednesday, 27 May, revealed that tokenised commercial bank and central bank deposits can be combined and settled on a shared platform.
A public-private collaboration led by BIS, Project Agorá uses a unified ledger architecture that provides ‘always-on’, multi-currency, atomic settlements. The project involves central banks from Japan, Korea, Mexico, Switzerland, the European Union (EU), the UK, and the Federal Reserve Bank of New York. The Bank of Canada recently announced plans to join.
Instead of exchanging messages through separate systems and settling later, Agorá combines a shared ledger holding tokenised commercial bank deposits with jurisdictional layers – separate ledgers controlled by each participating central bank, containing their tokenised reserves.
The system allows central banks to maintain sovereign control while coordinating international settlement. The prototype revealed that through the project’s distributed ledger technology (DLT), atomic settlement can occur across all seven participating jurisdictions.
Atomic settlement means either every balance update in a cross-border transaction happens, or none of them does. It doesn’t permit partial completion, removing settlement risk.
Project Agorá also utilises smart contracts that embed compliance demands into transactions. Its 24/7, ‘always-on’ nature should insulate it from diverging time zones.
According to the BIS report, cross-border payments are expected to reach $320 trillion by 2032, yet are burdened by: slow settlement due to sequential processing; liquidity getting trapped across jurisdictions; expensive reconciliation; repeated compliance and sanctions checks; and settlement risk during multi-step transfers.
While Project Agorá is anticipated to tackle many of these hurdles, more work is needed before it’s ready for production.
The main contender to Project Agora is seen as the Chinese-backed payments project mBridge, which includes Brazil, Russia, India, China, South Africa. It has processed over 4,000 transactions, worth around $55 billion in volume, and it operates with a different model to Agorá.
When asked why China wasn’t part of Project Agora, BIS Deputy General Manager Andrea Maechler said the project had another “constellation” of participants.
