The Bank for International Settlements (BIS) has released a chapter of its annual report that proposes a new type of financial market infrastructure called the “unified ledger.” This system would incorporate central bank digital currency (CBDC) and tokenized assets, powered by application programming interfaces (APIs), to enable faster transactions and atomic settlement in a partitioned data environment. The proposal critiques existing tokenization schemes, which it claims exist in silos, and suggests that the success of tokenization rests on the foundation of trust provided by central bank money. A unified ledger system would allow for considerable disintermediation in securities transactions, but cross-border transactions would require more coordination assuming an intermediated system with the presence of both central banks and private payment service providers.
The BIS proposal, along with the International Monetary Fund’s (IMF) single ledger proposal, uses familiar concepts such as tokenization, but crucially does not rely on blockchain technology. The full BIS annual report is due out on June 25, and this proposal could pave the way for a new era of cross-border transactions leveraging CBDC and tokenized assets.