Working with BIS on Project Agorá are seven central banks. They include the Bank of France, the Bank of Japan, the Bank of Korea, the Bank of Mexico, the Swiss National Bank, the Bank of England and the Federal Reserve Bank of New York.

They seek to understand whether using smart contracts can lead to new settlement processes and facilitate transactions that aren’t possible to complete today, the release said. The New York Federal Reserve Bank joined Project Agorá last month to understand if the tokenization of central or commercial bank funds running on a shared digital ledger could streamline cross-border payments, the agency said in a statement. 

“The project builds on the unified ledger concept proposed by the BIS and will investigate how tokenised commercial bank deposits can be seamlessly integrated with tokenized wholesale central bank money in a public-private programmable core financial platform,” the BIS wrote in a statement. “This could enhance the functioning of the monetary system and provide new solutions using smart contracts and programmability, while maintaining its two-tier structure.”

Private sector applicants eligible to participate may be any deposit-taking institution, or critical service provider for payments, such as a payments network, as long as they are subject to central bank oversight.

Besides its collaboration on Project Agorá, the Federal Reserve has been focusing on cross-border payments. During an event hosted by the South African Reserve Bank earlier this year, Fed Governor Michelle Bowman highlighted the benefits of better cross-border payments for the global economy. While some challenges within the cross-border payments system could be simplified, some of these barriers arise from the need to protect consumers and the overall financial system as well as business and customer preferences, Bowman said. 

As it stands, cross-border payments remain a headache for consumers, signaling a demand for a smoother payment method. A Mastercard report released last November said about half of consumers surveyed internationally cited cross-border payments as being slower and more complicated than domestic payments.