The Bank for International Settlements (BIS) has put forth a compelling argument for the adoption of unified ledger technology, as outlined in a paper coauthored by BIS chief Agustin Carstens. This paper introduces the concept of the “Finternet,” a futuristic financial system that utilizes unified ledgers as a means of revolutionizing the current financial landscape.
Unified ledgers have the potential to address various issues within the financial system, such as enhancing transaction speed, compliance, and privacy. According to the BIS paper, these ledgers bring together different financial asset markets and consolidate them onto a single programmable platform. This consolidation offers distinct advantages over digital transactions on alternative platforms, as it combines all the necessary components for completing financial transactions in one centralized location. By doing so, it eliminates the need for multiple technical standards and governance frameworks, as well as the reliance on third-party messaging systems.
It is important to note that the BIS does not propose a singular unified ledger. Instead, it envisions a network of interconnected ledgers that interact with each other and with the broader financial system through various applications. To facilitate transfers using smart contracts, these unified ledgers require the tokenization of assets, particularly money. The BIS’s proposal includes the introduction of a tokenization manager role responsible for monitoring regulatory requirements.
The concept of unified ledgers was first introduced by Carstens in February 2023 and was further explored in the BIS’s annual report for the same year. Additionally, the recently announced Project Agora, which involves central bank digital currency and tokenized money transfers, also heavily relies on unified ledger technology. The BIS, along with seven central banks, is actively participating in this project.
The idea of unified ledgers has also gained traction within the global financial messaging service SWIFT. Furthermore, the International Monetary Fund’s proposed XC platform shares many similarities with the concept of unified ledgers, further highlighting the growing interest in this technology within the financial sector.
In an unrelated context, it is worth mentioning that Senegal has embraced Bitcoin as a form of currency. The reasons behind this decision, however, are not relevant to the topic of unified ledgers.