Central banks test blockchain system for faster cross-border payments

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Central banks test blockchain payments

Highlights

Project Agorá, backed by seven major central banks and 40 large financial institutions, successfully tested tokenised cross-border settlement on a shared distributed ledger.
The prototype allows nearly instant atomic settlement using tokenised central bank reserves, with privacy and anti-money laundering safeguards, but only synthetic transfers (no real money) so far.
The project aims to bolster traditional financial institutions' role in cross-border payments, challenging crypto companies like Tether and Circle, and differentiating itself from China's Project mBridge.

Prototype advances tokenised settlement plans

As reported by the BIS and the International Institute of Finance, the Project Agorá prototype shows that commercial banks can transfer tokenised deposits across borders on a shared distributed ledger and settle transactions nearly instantly. The system uses tokenised central bank reserves for so-called atomic settlement, while preserving privacy and anti-money laundering checks.

The Bank for International Settlements and the IIF said in a report on Wednesday that the successful tests lay the groundwork for next-generation cross-border payment systems. They added that the model keeps correspondent banking as the backbone of global payments while using new technology to improve speed, cost and transparency.

The testing so far has been synthetic, meaning no real money has yet been used in cross-border transfers. Participants including JPMorgan Chase, HSBC, BNP Paribas, Visa, UBS and MUFG Bank plan to move to real cash transfers, although the report does not give a timetable.

Tim Adams, head of the IIF, said the priority is to ensure the system is implemented correctly rather than to meet a specific timeline. He said he remains confident that the project will continue to progress at a solid pace.

Strategic implications for global payments market

Project Agorá is backed by seven major central banks and 40 large financial institutions, with support spanning U.S., EU, UK, Japanese, Korean, Canadian, Swiss and Mexican institutions. The next phase is set to include the Bank of Canada alongside the Federal Reserve Bank of New York, the Bank of Japan, the Bank of France, the Bank of England, the Bank of Korea, the Bank of Mexico and the Swiss National Bank.

The initiative strengthens the position of central banks and traditional financial groups in the cross-border payments market, where U.S. dollar-backed stablecoins have emerged as a growing competitive threat. That market is currently dominated by crypto companies Tether and Circle.

The project also highlights a widening divide in the development of international payment infrastructure. Project Agorá stands apart from Project mBridge, a rival cross-border payment platform led by the Chinese central bank, from which the BIS withdrew in 2024.

Our earlier coverage of DTCC’s plan to connect its DTC tokenization service to the Stellar public blockchain explained how the firm aims to bring tokenized versions of DTC-custodied real-world assets onto a public network, with availability targeted for the first half of 2027. We noted that the move is part of a broader multi-chain strategy to improve interoperability between traditional market infrastructure and blockchains while maintaining existing investor protections across the full asset lifecycle.

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