On April 3, 2024, the Federal Reserve Bank of New York (FRBNY) announced that it will participate with seven other central banks and a large group of private financial firms in Project Agora, an international technical research project designed to investigate how asset tokenization can enhance the functioning of the monetary system, specifically focusing on cross-border payments. The initiative is spearheaded by the Bank for International Settlements (BIS) Innovation Hub and joined by the Bank of France, Bank of Japan, Bank of Korea, Bank of Mexico, Swiss National Bank, and the Bank of England. The banks will work in partnership with a large group of private financial firms convened by the Institute of International Finance (IIF).

Asset tokenization is the process of representing claims digitally on a programmable platform and is considered to be the next phase in the application of blockchain technology (see Practice Note, Asset Tokenization 101). Asset tokenization has become an increasingly popular topic in financial services and related markets for its potential to transform the nature and transferability of ownership rights in real-world assets.

In June of 2023, the BIS proposed a unified ledger concept designed to capture the benefits of tokenization by combining central bank money, tokenized deposits, and tokenized assets on a programmable platform. Project Agora builds on the unified ledger concept and seeks to investigate how tokenized commercial bank deposits can be seamlessly integrated with tokenized wholesale central bank money in a public-private programmable core financial platform. The BIS believes that this structure 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 states that a primary area of exploration will be to increase the speed and integrity of international payments, while lowering costs. The project will focus on how to overcome inefficiencies in cross-border payments, which involve an extra challenge to merge different legal, regulatory, and technical requirements, operating hours and time zones.

On April 3, 2024, the Board of Governors for the Federal Reserve System (FRB) published a contributed note entitled Tokenized Assets on Public Blockchains: How Transparent is the Blockchain? This note details findings from research that was conducted to better understand the implications of using a public blockchain (Ethereum) to run smart contracts underlying tokenized assets issued on the Ethereum blockchain. This research followed the issuance of two tokenized bonds on the Ethereum blockchain and was the result of an effort to better understand the kind of transparency offered by smart contract-based projects deployed on public blockchains.