BIS (Bank for International Settlements)

The Bank for International Settlements (BIS) is an international financial institution owned by central banks, founded in 1930 as the world’s oldest international financial institution. Often described as “the central bank of central banks,” the BIS fosters cooperation among central banks and other financial authorities, conducts research on monetary and financial stability issues, and provides banking services exclusively to central banks and international organizations. In the digital asset era, the BIS has become one of the most analytically important voices in central bank digital currency research and has set the capital standards that determine how much it costs banks globally to hold or handle crypto assets.

Role and Structure

The BIS is headquartered in Basel, Switzerland, and is owned by 63 central banks representing approximately 95% of world GDP. Its governance includes a Board of Directors, whose membership comprises central bank governors from major member central banks, and a General Manager who heads the Secretariat. Agustín Carstens, former Governor of the Banco de México, has served as BIS General Manager since 2017 and has been among the most prominent public voices from international financial institutions on crypto asset policy, consistently expressing skepticism about cryptocurrency as a form of money while supporting CBDC research and development.

The BIS hosts several committees that set international standards: the Basel Committee on Banking Supervision (BCBS), the Committee on Payments and Market Infrastructures (CPMI), the Financial Stability Board Secretariat, and the Markets Committee. These committees produce the standards and guidance that shape banking regulation and payment system oversight globally.

The BIS Innovation Hub

The BIS Innovation Hub was established in 2019 to explore the use of technology in the service of central banks. The Hub operates centers in Basel, Hong Kong, Singapore, London, Stockholm, the Eurosystem (Frankfurt and Paris), Toronto, and New York, each partnering with host central banks to develop practical proof of concept projects and policy research. The Hub’s work has focused heavily on CBDC design, tokenized asset infrastructure, and international payment system improvement.

Project mBridge: Multi-CBDC Platform

Project mBridge is the BIS Innovation Hub’s most significant cross-border payment project, developing a common platform for multi-CBDC transactions among central banks and commercial banks. The project involves the HKMA (Hong Kong), the People’s Bank of China, the UAE Central Bank, and the Bank of Thailand, with the BIS Innovation Hub providing technical coordination. mBridge uses a purpose-built distributed ledger allowing participating central banks to issue domestic CBDCs that can be transferred and settled directly on the platform without reliance on correspondent banking intermediaries.

The mBridge platform reached a Minimum Viable Product stage in mid-2024. In a notable development, the US Federal Reserve declined to join mBridge, and the project’s governance and expansion arrangements became a subject of geopolitical commentary given China’s central involvement. mBridge’s long-term significance lies in whether it establishes a new infrastructure layer for cross-border payments that bypasses the US dollar correspondent banking system.

Project Guardian and Tokenized Assets

Project Guardian, conducted jointly with the Monetary Authority of Singapore, explores tokenized assets and institutional DeFi. BIS Innovation Hub participation in Project Guardian pilots has focused on the central bank infrastructure layer: examining how tokenized assets could interact with tokenized central bank money, how atomic settlement of tokenized securities against central bank money could work technically, and what governance frameworks would be needed for a multi-issuer tokenized asset ecosystem. The Hub has published detailed technical reports from each Guardian pilot cohort that have informed global policy discussions.

Project Nexus: CBDC Interoperability

Project Nexus addresses interoperability among domestic instant payment systems, with the BIS serving as the technical architect of a standardized gateway protocol that could link national real-time payment systems (Singapore’s PayNow, India’s UPI, Thailand’s PromptPay, Malaysia’s DuitNow, and the Philippines’ InstaPay have all been involved). The project envisions extending the Nexus model to CBDC systems as domestic CBDCs become operational, potentially creating a global interoperability layer for central bank digital currency payments.

Basel Committee Crypto Capital Standards

The Basel Committee on Banking Supervision, hosted by the BIS, finalized its crypto-asset capital standards in December 2022, establishing the regulatory capital treatment that applies to banks’ holdings of and exposures to crypto assets worldwide. These standards are addressed in a separate encyclopedia entry (Basel III Crypto-Asset Exposure Rules) but represent a central BIS contribution to the regulatory architecture: by setting the capital cost of bank involvement in crypto, the Basel Committee powerfully shapes the speed and form of institutional adoption of digital assets.