The future of the monetary system is of great concern to the BIS. With the rise of digital payments, the Bank for International Settlements believes that the current monetary system is set to undergo a major transformation. The institution considers current financial technology to be inadequate and offers a solution: a unified ledger system!
The current monetary system: limited financial technology
Following the IMF which announced the design of a revolutionary platform based on a single register, it is the turn of the Bank for International Settlements to advocate for the creation of a unified register to accelerate the tokenization of the monetary system. The institution considered as the central bank of central banks has indeed published a chapter of its annual report on June 20.
In said chapter, the BRI presents its proposal creating “a new kind of financial market infrastructure”, a unified ledger that will be powered by application programming interfaces (APIs). To prove the relevance of this new solution, the authors of the proposal pointed out the limits of current financial technology.
“The crypto crisis and the halting progress of other tokenization projects underscore a key lesson. The success of tokenization relies on the trust provided by central bank money and its ability to bind together key elements of the financial system,” they said. For the BIS, central banks are able to guarantee confidence and a unified register created by them would considerably improve the current monetary system.
A unified ledger system for faster transactions
In the chapter of the published report, the BIS also discusses the benefits of a unified registry system. For the institution, this system will be able to integrate the registers of counterparties, reconciliation and programmed messaging and would therefore promote the speed of transactions.
In addition, thanks to the unified register, there will be significant disintermediation in securities transactions. The publication of the entire BIS annual report is scheduled for June 25.
As a reminder, the Bank for International Settlements is a financial institution whose role is to work for monetary and financial cooperation between States, to strengthen the regulation of banks and to promote better banking practices. Last year, the BIS distinguished itself by promoting CBDCs at the expense of cryptocurrencies.
Receive a digest of news in the world of cryptocurrencies by subscribing to our new service of daily and weekly so you don’t miss any of the essential Tremplin.io!
