- BIS Innovation Hub, Swiss National Bank, and World Bank successfully tested tokenizing promissory notes on blockchain, eliminating reconciliation needs.
- The project demonstrated significant time compression from weeks to seconds for processing activities like encashing notes.
- Tokenization preserved privacy while giving parties full control over their promissory note activities using Digital Asset’s Canton blockchain.
The BIS Innovation Hub has released findings from "Project Promissa," a proof of concept that successfully demonstrated the benefits of tokenizing promissory notes on blockchain technology. The project was a collaboration between the Swiss center of the BIS Innovation Hub, the Swiss National Bank (SNB), and the World Bank, with the International Monetary Fund (IMF) serving as an observer.
The experiment focused specifically on promissory notes issued by government finance ministries to multilateral development banks like the World Bank. These financial instruments, which are essentially formal IOUs that promise funding according to predetermined schedules, currently rely on paper-based processes with wet signatures that must be physically transported between countries and stored in central bank vaults.
Four Key Benefits Identified
According to the report published by BIS, the tokenization of promissory notes delivered four significant advantages. Most notably, using blockchain as a single source of truth eliminated the need for separate record-keeping and reconciliation efforts between ministries and development banks. Additionally, replacing traditional wet signatures with multiparty digital signatures dramatically accelerated processes like encashing notes, reducing timeframes from weeks to mere seconds.
The trial also demonstrated that blockchain implementation preserved privacy by limiting shared activities to relevant parties only. Moreover, each participating organization maintained complete control over their own activities related to the promissory notes throughout the process.
Technology and Future Implications
For the technical implementation, the project utilized Digital Asset’s Canton blockchain as the underlying infrastructure. This choice enabled the secure and efficient management of the tokenized financial instruments while maintaining appropriate access controls.
"By exploring how member contributions can evolve through tokenised promissory notes, this project helps us reimagine a key part of our financial architecture and it is a powerful example of how blockchain can be harnessed for global good," said Jorge Familiar, VP and Treasurer at the World Bank.
This initiative builds upon previous collaboration between the World Bank and the Swiss National Bank, which tested the use of Switzerland‘s pilot wholesale Central Bank Digital Currency (CBDC) when issuing a CHF 200 million digital bond on the SIX Digital Exchange. The successful completion of Project Promissa represents another step forward in modernizing traditional financial processes through digital innovation.
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