The BIS Innovation Hub’s Tokenization Project and CBDC Privacy Testing Program
The Bank for International Settlements (BIS) Innovation Hub has announced its plans to launch a blockchain-based tokenization project and expand its central bank digital currency (CBDC) privacy testing program. As part of its 2024 Innovation Hub work program, the BIS revealed six new initiatives, including projects related to cybersecurity, combating financial crime, CBDCs, and green finance.
New Tokenization Project: Project Promissa
One of the BIS’s new ventures is Project Promissa, a collaboration between the BIS, the Swiss National Bank, and the World Bank. The objective of this project is to create a proof-of-concept platform that simplifies the management and transparency of digital tokenized promissory notes using distributed ledger technology. The BIS aims to conclude the proof-of-concept by early 2025.
A promissory note represents a financial commitment to repay a specific amount of money at a predetermined time. Despite their significance in the financial system, most promissory notes are still paper-based. The BIS intends to digitize these notes through tokenization.
Retail CBDC Privacy Project: Project Aurum
The BIS Innovation Hub’s Hong Kong Centre will continue its research on privacy in retail CBDCs through Project Aurum. This initiative aims to enhance central banks’ understanding of privacy in CBDC system design by leveraging expertise from academia and privacy regulators. Project Aurum is a collaboration between the BIS and the Hong Kong Monetary Authority.
Aurum is a comprehensive CBDC system consisting of a wholesale interbank system and a retail e-wallet system. The project focuses on developing two types of tokens: an intermediated CBDC and a stablecoin backed by CBDCs, both of which will operate within the interbank system.
Hot Take: BIS Innovation Hub Expands Blockchain and CBDC Initiatives
The BIS Innovation Hub’s latest projects demonstrate its commitment to exploring the potential of blockchain technology and central bank digital currencies. With Project Promissa, the BIS aims to simplify the management and transparency of promissory notes through tokenization, while Project Aurum focuses on advancing privacy in retail CBDCs. These initiatives highlight the BIS’s dedication to innovation and collaboration in the evolving financial landscape.
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