Bank for International Settlements (BIS) Proposes Unified-Ledger Solution for Tokenized Cross-Border Asset Transactions

The Bank for International Settlements (BIS) has released an advanced chapter of its annual report, focusing on the future of the monetary system. The chapter introduces the concept of a “unified ledger,” which serves as a new type of financial market infrastructure. This proposal comes shortly after the International Monetary Fund (IMF) presented its own concept of a “single ledger” for cross-border payments.

The BIS proposal aims to leverage central bank digital currencies (CBDCs) and tokenized assets to establish a unified ledger powered by application programming interfaces (APIs). The authors emphasize the significance of trust in central bank money as the foundation for successful tokenization, highlighting the limitations of existing tokenization projects.

One of the drawbacks identified by the proposal is the fragmented nature of current tokenization schemes, operating in isolated silos. The unified ledger seeks to integrate the ledgers of counterparties, incorporating programmed reconciliation and messaging. This infrastructure enables faster transactions and simultaneous settlement in a partitioned data environment, where privacy and transparency are carefully controlled.

The implementation of a unified-ledger system would introduce significant disintermediation in securities transactions. Cross-border transactions would require enhanced coordination, considering the involvement of both central banks and private payment service providers in an intermediated system.

The BIS’s General Manager, Agustín Carstens, initially introduced the unified-ledger technology at the Singapore FinTech Festival. Similar to the IMF’s “single ledger” concept, the unified ledger draws upon familiar concepts and technologies within the cryptocurrency community. However, the IMF’s proposal faced immediate resistance from the crypto community.

It is noteworthy that both the single ledger and the BIS unified ledger proposals do not critically rely on blockchain technology. A previous joint project between the BIS and the Bank of England called Project Rosalind also relied on API technology. The full BIS annual report, including the comprehensive details of the unified-ledger proposal, is scheduled for release on June 25.

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