BIS ANNOUNCES CBDC, TOKENIZATION PROJECTS FOR 2024

Last updated: June 19, 2025, 22:59 | Written by: Caitlin Long

The Bank for International Settlements (BIS), often referred to as the central bank of central banks, has unveiled its ambitious work program for 2025, placing a significant emphasis on the future of finance.At the forefront of this initiative are groundbreaking projects centered around central bank digital currencies (CBDCs) and blockchain-based tokenization. The Bank for International Settlements (BIS) Innovation Hub will proceed to the second phase of its central bank digital currency (CBDC) privacy testing and launch a blockchain-based tokenizationThis announcement signals a pivotal moment in the evolution of the global financial landscape, potentially reshaping how we perceive and interact with money. The Bank for International Settlements (BIS) Innovation Hub will proceed to the second phase of its central bank digital currency (CBDC) privacy testing and launch a blockchain-based tokenization project in 2025. On Jan. 23, the BIS announced its work program for the year. It features six new projects exploring the issues of cybersecurityWith a track record of completing 12 innovation projects in 2024 and managing eight ongoing endeavors, the BIS Innovation Hub is well-positioned to drive meaningful change. Besides the Aurum CBDC initiative, BIS is also working on Project mBridge, a multi-CBDC common platform for wholesale cross-border payments. In September, BIS and central banks of France, Singapore, and Switzerland announced a successful testing of cross-border settlement for wholesale-CBDCs.The BIS's commitment extends beyond just technological innovation; it also encompasses critical areas such as cybersecurity, combating financial crime, and promoting green finance. BIS announces CBDC, tokenization projects for 2025The BIS program for this year features six new projects, exploring the issues of cyber security, fighting fBut what exactly do these projects entail, and what implications do they hold for the future of finance? The Bank for International Settlements (BIS) Innovation Hub intends to launch a blockchain-based tokenization project and further develop its central bank digital currency (CBDC) privacy testing program. On Tuesday, the BIS announced six new projects as part of its 2025 Innovation Hub work program. These included projects involving cyberWe'll explore these questions and more, providing you with a comprehensive understanding of the BIS's 2025 vision.

BIS Innovation Hub's 2025 Work Program: Key Highlights

The BIS Innovation Hub's 2025 work program is structured around six new projects designed to tackle pressing challenges and explore emerging opportunities in the financial sector. Tokenization Projects in Focus Project Promissa: Revolutionizing Financial Instruments. BIS s tokenization efforts include Project Promissa, a collaborative venture with the Swiss National Bank and the World Bank. This project focuses on digitizing promissory notes using blockchain technology, aiming to enhance efficiency and transparency inThese projects showcase the BIS's dedication to fostering innovation and collaboration within the global financial community. The Innovation Hub completed 12 projects in 2025 and eight more are ongoing. The Bank for International Settlements (BIS) today announced the first batch of six new projects in its 2025 Innovation Hub work programme, including experimentations on cyber security, fighting financial crime, central bank digital currencies (CBDCs) and green finance.Here's a closer look at the key areas of focus:

Cybersecurity: Addressing the growing threat of cyberattacks in the financial sector.
Fighting Financial Crime: Utilizing technology to combat money laundering and other illicit activities.
Central Bank Digital Currencies (CBDCs): Exploring the potential of CBDCs for enhanced payment systems and financial inclusion.
Green Finance: Developing innovative financial solutions to support sustainable development and combat climate change.
Tokenization: Investigating the use of blockchain technology to represent traditional assets digitally.
Future of Payments: Researching the efficiency and security of cross-border payment systems.

Cybersecurity Initiatives

In an increasingly interconnected world, cybersecurity threats pose a significant risk to the stability of the financial system.The BIS Innovation Hub's cybersecurity projects aim to develop robust defenses against these threats, protecting critical infrastructure and ensuring the integrity of financial data.These projects involve:

Developing advanced threat detection systems.
Implementing secure data sharing protocols.
Conducting stress tests to evaluate the resilience of financial institutions.

By strengthening cybersecurity measures, the BIS seeks to build a more secure and resilient financial ecosystem, safeguarding against potential disruptions and protecting consumers and businesses alike.

Combating Financial Crime

Financial crime, including money laundering and terrorist financing, continues to be a major concern for governments and financial institutions worldwide.The BIS Innovation Hub is committed to leveraging technology to combat these illicit activities, enhancing transparency and accountability in the financial system.These projects could include:

Developing AI-powered tools for detecting suspicious transactions.
Implementing blockchain-based solutions for tracking the flow of funds.
Improving cross-border collaboration to combat financial crime.

By utilizing cutting-edge technologies, the BIS aims to create a more transparent and secure financial system, making it harder for criminals to operate and reducing the risk of financial crime.

Advancing Central Bank Digital Currencies (CBDCs)

Central bank digital currencies (CBDCs) are digital forms of a nation's fiat currency, issued and regulated by the central bank.They represent a potentially revolutionary shift in how we transact and interact with money.The BIS Innovation Hub has been actively involved in exploring the potential of CBDCs, and its 2025 work program includes further development of its CBDC privacy testing program.This focus signifies the growing recognition of CBDCs as a viable alternative to traditional payment systems, offering potential benefits such as increased efficiency, reduced costs, and improved financial inclusion.

Project Aurum and CBDC Privacy

One of the key aspects of the BIS's CBDC work is addressing concerns around privacy.While CBDCs offer numerous advantages, ensuring the privacy of users is crucial for widespread adoption.Project Aurum, one of BIS's CBDC initiatives, focuses specifically on exploring different approaches to balancing the benefits of CBDCs with the need for privacy.The second phase of privacy testing will build upon the learnings from the initial phase, refining the design and implementation of CBDC systems to better protect user data.

This second phase will likely explore advanced cryptographic techniques, such as:

Zero-knowledge proofs: Allowing users to prove they meet certain conditions without revealing sensitive information.
Homomorphic encryption: Enabling computations on encrypted data without decrypting it.
Differential privacy: Adding noise to data to protect individual privacy while still allowing for meaningful analysis.

By incorporating these techniques, the BIS aims to create CBDC systems that are both efficient and privacy-preserving, fostering trust and encouraging wider adoption.

Project mBridge: Cross-Border Payments with CBDCs

In addition to privacy, the BIS is also focused on exploring the potential of CBDCs for cross-border payments.Project mBridge is a multi-CBDC common platform designed to facilitate seamless and efficient wholesale cross-border payments.In September of last year, the BIS, along with the central banks of France, Singapore, and Switzerland, successfully tested cross-border settlement for wholesale CBDCs through Project mBridge.This successful testing demonstrates the viability of CBDCs for streamlining international transactions, reducing costs, and improving transparency.

Project mBridge aims to address several key challenges in cross-border payments, including:

High transaction costs
Slow settlement times
Lack of transparency
Limited access for certain participants

By leveraging the benefits of blockchain technology and CBDCs, Project mBridge has the potential to transform the global payments landscape, making it easier and more affordable for businesses and individuals to send and receive money across borders.

Tokenization: Bridging the Gap Between Traditional Assets and Blockchain

Tokenization is the process of representing real-world assets, such as stocks, bonds, real estate, or commodities, as digital tokens on a blockchain.This allows for fractional ownership, increased liquidity, and greater accessibility to these assets.The BIS Innovation Hub recognizes the transformative potential of tokenization and plans to launch a blockchain-based tokenization project as part of its 2025 work program.This project will explore the various applications of tokenization, addressing regulatory challenges and promoting the responsible development of this emerging technology.

Project Promissa: Digitizing Promissory Notes

One prominent example of the BIS's tokenization efforts is Project Promissa, a collaborative venture with the Swiss National Bank and the World Bank.This project focuses on digitizing promissory notes using blockchain technology, aiming to enhance efficiency and transparency in the issuance, transfer, and management of these financial instruments.Promissory notes are commonly used in trade finance and supply chain finance, and tokenizing them can significantly reduce paperwork, streamline processes, and improve access to funding for businesses.

The benefits of digitizing promissory notes through Project Promissa include:

Reduced processing time and costs
Improved transparency and traceability
Enhanced security and reduced risk of fraud
Greater accessibility for smaller businesses

By demonstrating the practical applications of tokenization in the context of promissory notes, Project Promissa aims to pave the way for wider adoption of this technology across the financial industry.

Benefits of Tokenization

The potential benefits of tokenization extend far beyond promissory notes.Tokenizing various assets can unlock a range of opportunities, including:

Increased Liquidity: Tokenized assets can be easily traded on digital exchanges, increasing their liquidity and making them more accessible to investors.
Fractional Ownership: Tokenization allows for fractional ownership of high-value assets, such as real estate or fine art, making them more affordable and accessible to a wider range of investors.
Improved Efficiency: Tokenization can streamline processes, reduce paperwork, and automate tasks, leading to greater efficiency and cost savings.
Enhanced Transparency: Blockchain technology provides a transparent and immutable record of all transactions, increasing trust and accountability.
New Investment Opportunities: Tokenization can create new investment opportunities by unlocking the value of previously illiquid assets.

While tokenization holds immense promise, it is important to address regulatory challenges and ensure the responsible development of this technology.The BIS Innovation Hub's tokenization project will play a crucial role in shaping the future of tokenization, promoting best practices and fostering collaboration among stakeholders.

Green Finance: Sustainable Innovation for a Better Future

The BIS Innovation Hub recognizes the importance of addressing climate change and promoting sustainable development.Its 2025 work program includes projects focused on green finance, exploring innovative financial solutions to support environmental sustainability.These projects aim to:

Develop green bonds and other sustainable financial instruments.
Promote the use of technology to track and monitor environmental impact.
Encourage investment in renewable energy and other green technologies.

By supporting green finance initiatives, the BIS seeks to mobilize capital towards sustainable projects and contribute to a more environmentally responsible global economy.

Frequently Asked Questions (FAQs)

What is the Bank for International Settlements (BIS)?

The Bank for International Settlements (BIS) is an international financial institution owned by central banks.It serves as a forum for international monetary and financial cooperation and acts as a bank for central banks.Often referred to as the ""central bank of central banks,"" the BIS plays a crucial role in promoting global financial stability.

What is the BIS Innovation Hub?

The BIS Innovation Hub was established to identify and develop insights into critical trends in technology affecting central banking.It aims to foster innovation, improve the functioning of the global financial system, and contribute to a more sustainable and inclusive economy.The Innovation Hub undertakes projects on a range of topics, including CBDCs, cybersecurity, and green finance.

What are Central Bank Digital Currencies (CBDCs)?

Central Bank Digital Currencies (CBDCs) are digital forms of a nation's fiat currency, issued and regulated by the central bank.They are essentially digital versions of cash, offering potential benefits such as increased efficiency, reduced costs, and improved financial inclusion.However, they also raise important questions about privacy and security that need to be carefully addressed.

What is Tokenization?

What are the potential benefits of CBDCs?

CBDCs offer several potential benefits, including:

Lower transaction costs
Faster and more efficient payments
Improved financial inclusion
Reduced risk of fraud
Greater transparency

What are the potential risks of CBDCs?

CBDCs also pose some potential risks, including:

Privacy concerns
Cybersecurity threats
Disruption to the banking system
Potential for illicit use

What are the regulatory challenges associated with tokenization?

Tokenization faces several regulatory challenges, including:

Lack of clarity on legal status of tokens
Securities laws and regulations
Anti-money laundering (AML) and know-your-customer (KYC) requirements
Tax implications

Conclusion: Shaping the Future of Finance

The Bank for International Settlements' (BIS) announcement of its 2025 work program, with a strong focus on CBDCs and tokenization, marks a significant step towards the future of finance.The projects outlined demonstrate the BIS's commitment to exploring the potential of these technologies to improve the efficiency, security, and accessibility of the financial system.From advancing CBDC privacy through Project Aurum to digitizing promissory notes through Project Promissa, the BIS is actively shaping the future of money and finance.

Key takeaways from the BIS's 2025 work program include:

A strong emphasis on cybersecurity and combating financial crime.
Continued exploration of CBDCs and their potential for cross-border payments.
A focus on tokenization and its ability to unlock new investment opportunities.
A commitment to green finance and sustainable development.

As the BIS continues to innovate and collaborate with central banks and other stakeholders, we can expect to see further advancements in these areas, ultimately leading to a more efficient, inclusive, and sustainable financial system.Stay informed and engaged as these projects unfold, because they will undoubtedly impact the way we manage and interact with money in the years to come.The future of finance is being built now, and the BIS is playing a leading role in shaping that future.