Today the Bank for International Settlements’ Committee on Payments and Market Infrastructures (CPMI) outlined its strategic priorities for its 2024/25 work program. Digital innovations in payment, clearing and settlement is one of the three focus areas.
The CPMI is exploring tokenization, particularly in the context of money and payments and will release a G20 report in conjunction with the BIS. Secondly it is analysing not just the technology and policy choices for cross border CBDC, but also the ideal timing. In conjunction with IOSCO it will expand its stablecoin analysis to include multi-currency and asset-linked stablecoins.
Apart from innovations the other two focus areas in the work program are risks to financial market infrastructures (FMIs) and cross border payments.
Regarding FMI risks, the CPMI didn’t mention distributed ledger technology, but we believe there is ongoing joint work with IOSCO to assess the risks to FMIs of using DLT. Additionally, the work program includes FX settlement risk. The CPMI previously identified the role of new DLT-based infrastructures in potentially providing payment versus payment settlement to reduce FX risks.
On cross border payments, the CPMI’s current focus is mainly on interconnecting faster payment systems, with a briefing note on the topic published earlier this week. The role of tokenization really falls under the innovation category, rather than cross border payments. However, the BIS Innovation Hub has its major tokenization Project Agorá involving seven central banks for cross border payments using the existing correspondent banking model.
