More than 40 financial firms will join the Bank for International Settlements – often referred to as the central bank for central banks – to explore how tokenization can be used in wholesale cross-border payments through its Project Agorá, the BIS said on Monday.

The financial firms were selected by the BIS following a public call for participation in May. Project Agorá will now begin the design phase of the project.

Tokenization is the digitization of real world assets. Several countries have been exploring how best to maximize this nascent technology.

The BIS launched Project Agorá in April, bringing together seven monetary authorities from the U.K., Japan, South Korea, Mexico, Switzerland, the U.S. and Europe.

It builds on the BIS's unified ledger concept and "will investigate how tokenized commercial bank deposits can be seamlessly integrated with tokenized wholesale central bank money in a public-private programmable core financial platform," the BIS said on its website.

"This major public-private partnership will seek to overcome several structural inefficiencies in how payments happen today, especially across borders," the BIS said.

The challenges for cross-border payments that the BIS wants to overcome include different legal, regulatory and technical requirements as well as various operating hours.

Edited by Nikhilesh De.