Project Agora Bank Consortium Counters Stablecoins With Programmable Fiat

In the digital age, banks and other traditional financial incumbents face the core challenge of building or being built upon.

This challenge is coming to a head in the stablecoins sector, but legacy players may have a trick hidden up their sleeves. While cryptocurrency has tried for over a decade to integrate within the traditional, U.S.-driven financial system, banks themselves have been innovating in the meantime.

It was just over a year ago that the Bank for International Settlements (BIS) and seven global central banks announced Project Agora, Greek for “marketplace,” a collaborative initiative to build a multicurrency unified ledger that merges tokenized commercial bank deposits with wholesale central bank money, all on a programmable platform featuring smart contracts.

The interplay between Project Agora’s outcomes and the potentially broader integration of stablecoins across the U.S. market could represent a potential inflection point in the evolution of digital money.

While stablecoins — especially fiat-backed tokens like USDC, USDT and others — have long been heralded as the future of seamless, global, programmable value transfer, Project Agora’s goal challenges their relevance, particularly in the institutional, cross-border and regulated financial sphere.

Read also: 5 Blockchain Projects the World’s Biggest Banks Are Behind

What Is Project Agora?

Project Agora is a bank consortium blockchain pilot grounded in a two-tier monetary system. Central banks will continue to issue wholesale central bank money, while commercial banks maintain their role as deposit issuers. The innovation lies in tokenizing these liabilities and integrating them on a shared blockchain ledger where smart contracts can automate compliance steps, payments and settlement sequencing.

The project incorporates central banks, including the Federal Reserve Bank of New York, Bank of England, Bank of France, Bank of Japan, Bank of Korea, Bank of Mexico and the Swiss National Bank. These banks will engage with private sector banks like Citi, HSBC, Deutsche Bank, Standard Chartered, Lloyds Bank and global infrastructure providers such as SWIFT, Euroclear, SDX, Visa and Mastercard — all brought together by the Institute of International Finance (IIF).

“We will not just test the technology, we will test it within the specific operational, regulatory and legal conditions of the participating currencies, together with financial companies operating in them,” BIS Innovation Hub Head Cecilia Skingsley said in a statement when Project Agora was announced April 3, 2024.

BIS Economic Adviser and Head of Research Hyun Song Shin said at the time: “These functionalities will come without sacrificing the safeguards on the integrity and governance of the monetary system.”

Therein crystallizes the crucial question of the project: Can programmable fiat act as a middle ground — combining the control and trust of regulated money with the innovation engine of blockchain-powered money? Project Agora reflects banks retaking the narrative that programmable, efficient money doesn’t require crypto-native infrastructure.

If yes, it could redefine how global value moves and render stablecoins, the original disruptors, either regulated, repurposed or irrelevant across many institutional payment contexts. That’s a big if, in more ways than one. But it’s one that Rohit Chopra, who was the third director of the Consumer Financial Protection Bureau and previous member of the Federal Trade Commission, pointed to at a May stablecoin conference where he advocated for tokenized bank deposits of U.S. fiat to form the backing of a U.S. stablecoin.

See also: Can Digital Wallets, Stablecoins Solve Small Banks’ Cross-Border Cost Center?

The Emerging Stablecoin Landscape

In recent years, private stablecoins have upped their threats to bypass slower traditional rails by offering near-instant settlements, broad global reach and user-friendly programmability. These digital currencies have underlined gaps in cross-border systems and pushed incumbents to adapt.

Yet stablecoins also raise systemic risks, such as reserve opacity, regulatory arbitrage and concentration of private power. These private stablecoins are largely unregulated and now settle billions of dollars in daily transactions across decentralized finance (DeFi) protocols and exchanges, and increasingly mainstream commerce occasions.

Such concerns have prompted central banks to accelerate work on digital versions of their own currencies.

Project Agora is seeking to address the wholesale heart of cross-border systems. By offering tokenized central bank money alongside commercial tokens on a shared digital infrastructure, banks may be able to crowd out private stablecoins for interbank and institutional transfers, without ceding oversight or public trust.

Agora doesn’t kill stablecoins. But by offering a credible, supervised alternative, it raises the bar, forcing private issuance to compete on compliance, resilience and institutional usability rather than just speed.

While the work remains experimental, it is designed to produce real, testable code and real-world flows.

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