The Bank for International Settlements has presented its fullest and strongest argument so far for unified ledger technology in a paper coauthored by BIS chief Agustin Carstens. The paper describes a “financial system for the future,” which it calls the Finternet, that would use unified ledgers as a vehicle.

Unified ledgers could remove a host of the pain points in the current financial system by improving speed, compliance and privacy in the financial system, the BIS paper claimed. Unified ledgers “bring together multiple financial asset markets […] as executable objects on common programmable platforms.” This flexibility offers advantages over digital transactions on other platforms:

“Even when individuals use sophisticated front-end interfaces to make supposedly ‘digital’ transactions, behind the scenes, movements of money and other financial assets often rely on the owners of siloed proprietary databases to initiate and process transfers.”

Unified ledgers “combine all the components needed to complete financial transactions—financial assets, ownership records, rules governing their use and other relevant information—in a single venue.” This gives them the potential to overcome issues related to technical standards and governance and eliminate third-party messaging systems.

Related: SWIFT proposes a role for itself in a tokenized future on a unified ledger

However, the BIS does not envision a single unified ledger. Rather, multiple unified ledgers would interact among themselves and with the financial system beyond the Finternet through apps. Unified ledgers require tokenization of assets, especially money, for transfers using smart contracts. The proposal creates a tokenization manager role that would monitor regulatory requirements.

Carstens introduced the concept of unified ledger in February 2023. The topic was taken up again in the 2023 BIS annual report. The recently announced Project Agora also crucially uses unified ledger. The BIS and seven central banks are participating in that project, which involves central bank digital currency and tokenized money transfers.

The idea has also been considered by global financial messaging service SWIFT. The international Monetary Fund’s proposed XC platform is also highly similar in many details.

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