The Bank for International Settlements (BIS) has presented a compelling argument for the adoption of unified ledger technology in a recent paper coauthored by BIS chief Agustin Carstens. The paper envisions a revolutionary “financial system for the future” called the Finternet, which would leverage unified ledgers as a means of addressing various issues within the current financial system.
According to the BIS paper, unified ledgers have the potential to enhance speed, compliance, and privacy in financial transactions, thereby alleviating many of the challenges faced by the existing system. By consolidating multiple financial asset markets onto common programmable platforms, unified ledgers offer greater flexibility compared to digital transactions on alternative platforms. They serve as an all-in-one solution, combining the necessary components of financial transactions, such as financial assets, ownership records, usage rules, and pertinent information, in a single venue. This feature enables them to overcome obstacles related to technical standards, governance, and the need for third-party messaging systems.
It is important to note that the BIS does not envision a single unified ledger. Rather, it proposes the use of multiple unified ledgers that would interact with one another and with the wider financial system through applications. To facilitate transfers using smart contracts, unified ledgers would require the tokenization of assets, particularly money. In order to ensure compliance with regulatory requirements, the BIS suggests the establishment of a tokenization manager role.
The concept of unified ledger was first introduced by Carstens in February 2023 and subsequently discussed in the 2023 BIS annual report. The recently announced Project Agora, which involves central bank digital currency and tokenized money transfers, also relies heavily on unified ledger technology. In addition, global financial messaging service SWIFT has expressed interest in this idea, while the International Monetary Fund’s proposed XC platform shares many similarities with unified ledgers.
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