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BIS publishes proposal for a unified ledger for cross-border tokenized asset transactions

Published on

June 20, 2023
Read Time:1 Minute, 48 Second

The Financial institution for Worldwide Settlements (BIS) has revealed a chapter of its annual report forward of schedule. On this chapter on the way forward for the financial system, "a brand new form of monetary market infrastructure - a unified ledger" was mentioned. The chapter was revealed on June 20, a day after the Worldwide Financial Fund (IMF) revealed a paper detailing its “single ledger” cross-border funds idea.

The BIS proposal leverages the central financial institution digital forex (CBDC) and tokenized property in “a brand new breed of economic market infrastructure,” i.e. the unified ledger, powered by software programming interfaces (APIs). The authors of the proposal criticized current monetary expertise. She called:

“The collapse of crypto and the faltering progress of different tokenization tasks underscore an necessary lesson. The success of tokenization rests on the belief that central financial institution cash presents and its skill to attach key components of the monetary system.”

A draw back to present tokenization programs is that they exist in silos, the proposal says. A unified ledger would come with counterparty ledgers, programmed reconciliation and messaging, enabling quicker transactions and atomic (concurrent) settlement in a "partitioned information setting" the place privateness and transparency are managed.

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A unified ledger system would permit for vital disintermediation in securities transactions. Cross-border transactions would require extra coordination, supplied it was an middleman system with the presence of each central banks and personal cost service suppliers.

BIS Managing Director Agustín Carstens first talked about unified ledger expertise on the Singapore FinTech Pageant in February. Just like the IMF's "single ledger" that launched a day earlier, the unified ledger makes use of ideas and applied sciences well-known within the cryptocurrency group. The IMF proposal met instant opposition from the crypto group.

Neither the Single Ledger nor the BIS Unified Ledger rely critically on blockchain expertise. The Rosalind undertaking, run by the BIS and Financial institution of England, additionally relied on API expertise. The total BIS Annual Report shall be revealed on 25 June.

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Azeez Mustafa
Azeez began his FinTech career path in 2008 after growing interest and intrigue about market wizards and how they managed to become victorious on the battlefield of the financial world. After a decade of learning, reading and training the ins and outs of the industry, he’s now a sought after trading professional, technical/currency analyst and funds manager – as well as an author.
Last Updated : June 20, 2023
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