Bank of France (representing the Eurosystem), Bank of Japan, Bank of Korea, Bank of Mexico, Swiss National Bank, Bank of England and the Federal Reserve Bank of New York will seek to work in partnership with a large group of private financial firms convened by the Institute of International Finance (IIF). 

Project Agorá builds on the unified ledger concept proposed by the BIS and will investigate how tokenised commercial bank deposits can be "seamlessly integrated with tokenised wholesale central bank money in a public-private programmable core financial platform."

According to BIS, this could "enhance the functioning of the monetary system and provide new solutions using smart contracts and programmability, while maintaining its two-tier structure." 

The BIS will issue a call for expressions of interest to private financial institutions to join Project Agorá. 

Under MAS’ Project Guardian, MAS collaborated with 15 financial institutions to carry out industry pilots on asset tokenisation in fixed income, foreign exchange, and asset management products. These pilots demonstrated the potential to "reap significant market and transaction efficiencies from the use of tokenisation". 

MAS said that as the pilots grow in scale, there is a need for "closer cross-border collaboration among policymakers and regulators." The regulator has therefore established a Project Guardian policymaker group comprising the FSA, FCA and FINMA . 

The policymaker group will aim to:

a) advance discussions on legal, policy and accounting treatment of digital assets;

b) identify potential risks and possible gaps in existing policies and legislation relevant to tokenised solutions;

c) explore the development of common standards for the design of digital asset networks and market best practices across various jurisdictions;

d) promote high standards of interoperability to support cross-border digital assets development;

e) facilitate industry pilots for digital assets through regulatory sandboxes, where applicable; and

f) promote knowledge sharing among regulators and industry. 

Leong Sing Chiong, Deputy Managing Director (Markets and Development) at MAS, said the partnership "shows a strong desire among policymakers to deepen our understanding of the opportunities and risks arising from digital asset innovation. Through this partnership, we hope to promote the development of common standards and regulatory frameworks that can better support cross border interoperability, as well as sustainable growth of the digital asset ecosystem.” 

Mamoru Yanase, Deputy Director-General of the Strategy Development and Management Bureau at the FSA, said: "We are delighted to join the Project Guardian as an observer. Decentralized financial ecosystem continues to develop in complexity, and it is important to address emerging risks. Blockchain technology including web3 has a potential to become a strong driver of innovation. We look forward to working with MAS, traditional financial institutions and FinTech firms to further enhance our knowledge in this area."

The article presents the lesson learned from the recent dislocation of cryptoassets and stablecoins, Japan’s regulatory framework on cryptoassets and the need for global coordination on regulation and supervision of cryptoassets.

Kuroda said various stablecoins circulated on permissionless blockchains are emerging, which can be considered an "unbundling of two payment functions: one for issuing liabilities, or put differently, settlement assets, and the other for recording interest in settlement assets."

He also said the Bank of Japan will begin a pilot program for a central bank digital currency this April.

Uchida said the Bank of Japan has decided to launch a pilot program in April 2023, which will have two purposes: first, to test the technical feasibility not fully covered by the proof of concepts that were previously carried out to test the technical feasibility of the core functions and features required for a CBDC, and second, to utilize the skills and insights of private businesses in terms of technology and operation for designing a CBDC ecosystem in the possible event of social implementation.

He said that with regard to the first element, the Bank plans to "develop a system for experiments, where a central system, intermediary network systems, intermediary systems, and endpoint devices would be configured in an integrated manner. On this basis, we plan to test the end-to-end process flow and outline the measures and potential challenges for connecting the experimental system with external ones."

For the second element, the Bank hopes the pilot program will lead to "improved designs through discussion with private businesses." Topics on the agenda include "measures and potential challenges for connecting the experimental system with external ones, alternative data models and architectures for offline payments, the optimal design of the CBDC system in providing value-added services, and challenges and technologies or functions that could become necessary where a touchpoint with users arises." In order to achieve this, the Bank will establish a CBDC Forum and invite private businesses engaged in retail payments or in related technologies to participate. 

As to how the pilot program will proceed, Uchida  said the Bank will launch the experiments with "narrowed objectives, gradually expanding the scope of our experiments in a phased and planned manner. At present, we do not assume any actual transactions to take place among retailers and consumers; only simulated transactions will be settled in the test environment. We will continue to communicate externally, with high transparency, in sharing topics including the specifics of the pilot program and updates on progress made."