The Bank of International Settlements (BIS) is a developer of public technological solutions to support central banks and improve the functioning of the financial system. It has played a significant role in shaping the perception of crypto, providing policy decisions to global financial watchdogs, identifying loopholes in the adoption of digital assets, and more recently taking a more positive stance.
BIS believes that private financial players are driving the sentiment towards digital assets for transactions, with their ability to act quickly and with only domestic legislation to abide by, putting them at a competitive advantage over central banks. The primary reason for this is the creation of Central Bank Digital Currencies (CBDCs) as a digital iteration of existing currencies, not backed by assets like private crypto tokens or stablecoins. BIS believes this can be a game changer for the global payments system, incorporating payments on a distributed ledger for settlements in wholesale and retail transactions.
BIS has been a proponent of settling payments using digital assets backed by central banks. In 2021, Project Jura, launched by BIS, tested the transfer of digital currencies (euros and Swiss francs) between French and Swiss banks on a secure platform. The platform was designed to settle trades involving tokenised assets and foreign exchange. Another successful attempt was Project Dumbarton, designed to facilitate cross-border transactions between financial institutions in a swift and low-cost manner, and enable international settlements using digital currencies issued by multiple central banks. Project Cambridge was a sandbox for central banks to serve as a specialised platform for the implementation of multi-currency cross-border payments in CBDCs.
Project Atlas, announced by BIS, is an ambitious project, not just tap into cross-border payments, but also ensuring fair information access for Bitcoin transactions worldwide. The goal of Atlas is to create a layered approach to data vetting and tailored statistics for central banks. The platform collects, cleans and analyses data relevant to central banks’ mandates, and can detect discrepancies and misinformation. This information sharing and understanding of any implications for the existing monetary system can lead to more customised policy responses based on tailored statistics, helping central banks address any challenges and opportunities posed by crypto assets and DeFi.
The steps taken by the BIS, in collaboration with its partners, De Nederlandsche Bank, and the Deutsche Bundesbank, to create Project Atlas are promising for a transparent data monitoring system in digital asset generation, management and transactions. The data collected by Atlas can also provide insights into potential improvements to the technology, making transactions in the digital asset space smoother. This platform could be beneficial for stakeholders, including central banks, as it can provide real-time data which can improve market integrity and accountability.
In conclusion, Project Atlas and its focus on crypto-asset markets and DeFi is an indication of the importance of blockchain-based digital assets in the broader financial landscape. The implications of this initiative could extend to regulatory and policy responses, risk assessment, and international cooperation in the evolving world of crypto assets and DeFi, leading to a more effective instrument for global crypto adoption and facilitation.
