BIS: Tokenization enables atomic cross-border settlement

The Bank for International Settlements reported that a prototype developed under Project Agorá demonstrated atomic, all‑or‑nothing settlement for wholesale cross‑border payments across multiple currencies and seven jurisdictions. The tests used tokenized representations of central bank and commercial bank balances and executed chained transactions so either every leg of a payment settles or none do.

The prototype relied on a layered architecture that allows central banks to retain operational control of their domestic systems while interacting through a shared interoperable platform. Legal analysis carried out for the project found that settlement finality can be achieved across the seven participating jurisdictions, though the report said further technical, operational and contractual work is needed to align the design with national laws.

Project Agorá was convened by the BIS and the Institute of International Finance to address delays, counterparty risk and operational friction in multi‑currency wholesale payments. Participants in the initial phase included the Federal Reserve Bank of New York, the Bank of England, the Bank of France, the Bank of Japan, the Bank of Korea, the Bank of Mexico and the Swiss National Bank. More than 40 private sector financial institutions took part in designing and testing the prototype. The Bank of Canada will formally join as the eighth central bank participant.

On data protection, the report described technology layers that can shield sensitive balance and transaction information while allowing visibility for authorized parties to meet regulatory requirements. The report wrote: “The modular design can unlock new capabilities, including conditional and always‑on payments, while enabling future enhancements in areas such as anti‑money laundering, countering the financing of terrorism, sanctions compliance, and fraud detection, as regulatory and data‑sharing frameworks evolve.”

Next steps for Project Agorá include moving to real‑value testing with selected currencies, expanding the role of private sector participants and further collaboration among central banks on operational and legal arrangements. The report noted that while the prototype demonstrates technical feasibility, scaling to live systems will require work on governance, interoperability standards and contractual frameworks that respect national legal requirements.