The Bank for International Settlements (BIS) has unveiled its 2024 strategy, placing substantial emphasis on the advancement of digital currency research and the burgeoning field of tokenization. The BIS Innovation Hub has charted a comprehensive program for the upcoming year, targeting central bank digital currencies (CBDCs) as a core area of development and examining the transformative role of tokenization in modernizing financial systems.
Advancing CBDC Research and Privacy
With the announcement made on January 23, the BIS Innovation Hub is gearing up for a pivotal year. The institution will progress to the second phase of Project Aurum, which focuses on the privacy aspects of retail payments facilitated through CBDCs. This follows the triumphant creation of both a wholesale interbank system and a retail CBDC prototype by the Hong Kong Monetary Authority (HKMA) in the preceding year.
Tokenization Takes Center Stage
Cecilia Skingsley, the head of the BIS Innovation Hub, has underscored the critical importance of tokenization within financial infrastructures. Project Promissa stands out as a collaborative effort with the Swiss National Bank and the World Bank, targeting the digitization of traditional financial instruments, such as promissory notes, to facilitate more efficient management and heightened transparency through blockchain technology.
Ongoing Projects and New Initiatives
The BIS is not stopping at Project Promissa. It is also set to continue other significant projects, including Project Mandala for automated cross-border payment compliance, Project Pyxtrail for stablecoin balance sheet monitoring, and Project Cambridge for the exploration of multi-CBDC platforms.
In an exciting development, the BIS Innovation Hub is launching six new ventures. These include Project Leap, which addresses the protection of payment systems against quantum computing threats, and Project Symbiosis, which utilizes AI and big data for supply chain emissions disclosures. Additionally, the Project NGFS Data Directory 2.0 will improve access to climate-related data, and Project Hertha will delve into financial crime patterns within payment systems.
Collaborative Efforts for CBDC Architecture
Central banks across the Americas are working under the BIS’s leadership to pinpoint technical priorities for CBDC architecture. The Consultative Group on Innovation and the Digital Economy (CGIDE) recently provided a detailed reference for countries that are researching or implementing CBDCs, focusing on designing a CBDC proof of concept that addresses interoperability, scalability, user-centric design, security, and data privacy.
Project Tourbillon: Balancing Privacy and Transparency
Another significant stride has been made by Project Tourbillon, spearheaded by the BIS Innovation Hub. The project has shown promising developments in striking a balance between privacy and transparency in CBDC transactions. The final report from Project Tourbillon illustrates a system that allows for secure payments without compromising personal information, solidifying the BIS’s dedication to crafting CBDC technology that places a strong focus on user privacy.
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