The Bank for International Settlements (BIS) plans to continue a series of pilot projects in 2024 to explore tokenization. In addition, it will explore the creation and interoperability of central bank digital currencies (CBDC), cybersecurity, and sustainable finance.
The BIS Innovation Hub reported on the successes of the past year and outlined the agency’s plans to continue its CBDC and asset tokenization experiments. At least six new pilots are planned for 2024.
According to Cecilia Skingsley, Head of the BIS Innovation Hub, the regulator completed 12 pilot projects in 2023 to study the potential of new technologies in collaboration with central banks, international organizations, and financial entities. Skingsley said the agency’s main goal is to boost the efficiency of payments without compromising security. Over the past four years, the BIS Innovation Hub ran nearly 30 projects in a variety of areas. “It’s our job to make sure technology serves economically meaningful activities,” Skingsley emphasized.
In 2024, the BIS analysts will focus on exploring issues around cybersecurity, fighting financial crime, CBDCs, sustainable finance, and tokenization. Skingsley highlighted the launch of six pilot projects, namely:
- Project Promissa. An initiative by the Swiss National Bank and the World Bank, where the BIS will explore the feasibility of tokenizing promissory notes.
- Project Aurum. A project that focuses on exploring the privacy of payments using retail CBDCs. Testing will take place with the Hong Kong Monetary Authority (HKMA).
- Project NGFS Data Directory 2.0. Together with the Monetary Authority of Singapore (MAS), the Network for Greening the Financial System (NGFS) project’s technical framework is to be simplified for further mass use.
- Project Hertha. A joint project with the Bank of England to test the use of network analytics to identify patterns of financial crime in payment systems.
- Project Leap. A joint project with the Banque de France and Deutsche Bundesbank to create a payment system protected against potential threats associated with the development of quantum computers.
- Project Symbiosis. The Hong Kong Monetary Authority (HKMA), together with the BIS, will test the use of artificial intelligence (AI) in relation to Big Data in the context of supply chain operations.
Apart from new projects, the regulator will further work on initiatives that are already underway, including:
- Project Mandala, which is prototyping protocols for cross-border payments that involve the ability to automatically comply with regulatory requirements across jurisdictions.
- Project mBridge, which will launch an MVP to commercialize a cross-border payments platform using CBDCs.
- Project Pyxtrial, which is exploring technology solutions for monitoring assets that act as collateral for stablecoins.
In 2023, the BIS repeatedly criticized cryptocurrencies, while backing the development of CBDCs. Moreover, with the assistance of several EU banks, the concept of a monitoring system for cross-border transfers made in crypto was developed.
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