The central banks plan to join forces with the private sector for Project Agorá, exploring how tokenisation of wholesale central bank money and commercial bank deposits on programmable platforms can improve the monetary system.

Building on a unified ledger concept proposed by the BIS last year, the project will investigate how tokenised commercial bank deposits can be seamlessly integrated with tokenised wholesale central bank money in a public-private programmable core financial platform.

This, says the BIS, could enhance the functioning of the monetary system and provide new solutions using smart contracts and programmability, while maintaining its two-tier structure.

The main aim is to increase the speed and integrity of international payments, while lowering costs.

The Bank of France, Bank of Japan, Bank of Korea, Bank of Mexico, Swiss National Bank, Bank of England and the Federal Reserve Bank of New York are all participating. They will work with a “a large group of private financial firms” convened by the Institute of International Finance.

Cecilia Skingsley, head, BIS Innovation Hub, said: “Today, numerous payment systems, accounting ledgers and data registries require other complex systems to integrate them. In Project Agorá, we want to explore a new common payment infrastructure that could bring all these elements together and might make the system work more efficiently together on a digital core financial infrastructure.

“We will not just test the technology, we will test it within the specific operational, regulatory and legal conditions of the participating currencies, together with financial companies operating in them.”