Project Promissa was successfully tested, the first international initiative confirming the applicability of distributed ledger technology (DLT) to modernize the system of sovereign contributions to multilateral development banks (MDB).
The Bank for International Settlements (BIS), the World Bank, and the Swiss National Bank (SNB) reported the successful testing of Project Promissa, a prototype DLT platform for tokenizing sovereign promissory notes. As part of the project, a proof-of-concept (PoC) was implemented, confirming both the technical and legal feasibility of tokenizing promissory notes used by countries to contribute to global development banks.
The project demonstrated that tokenization can radically simplify and accelerate the accounting and encashment of promissory notes, which represent up to 60% of contribution flows for fund replenishments to institutions such as the International Development Association (IDA).
The goal of Project Promissa was to eliminate the limitations of paper-based promissory notes, such as the need for physical signatures, transportation, and constant coordination between finance ministries, central banks, and MDBs. The new approach involves tokenizing promissory notes on a platform built on distributed ledger technology using the Canton protocol and Daml smart contract language.
Key features of the platform include:
- a single source of truth (golden record) with real-time synchronized data on all promissory notes;
- multi-signatures and automation throughout the asset lifecycle, including issuance, encashment, and archiving;
- confidential data access, asset control, and dedicated system nodes for each participating party.
Seven countries took part in the pilot testing, including Germany, India, and Switzerland, alongside representatives from the World Bank, IDA, International Finance Corporation (IFC), and the Asian Development Bank (ADB). Over the course of seven sessions, participants simulated 90 days of platform operations, including five key scenarios: issuance, custody, scheduled and unscheduled encashment, updates, and archiving of promissory notes.
The platform successfully handled all tasks, accelerating operational processes from weeks to seconds. Participants particularly noted the ability to track promissory note status, receive instant notifications, and access built-in analytics.
Moreover, the project showed that legal barriers to implementation are relatively low, considering sovereign promissory notes aren’t traded on the open market but are based on international agreements. However, before moving to full-scale deployment, several issues need to be addressed:
- the legal status of tokenized promissory notes;
- the role of central banks in the new architecture;
- governance of the platform, sources of funding, and support mechanisms.
Project participants expressed interest in further developing the platform and moving to the operational deployment phase. Priorities include implementing access control features (four-eyes principle), integration with payment and archiving systems, and resolving organizational issues regarding platform operations.
Project Agorá, another international initiative by BIS focused on integrating tokenized commercial bank deposits and wholesale central bank digital currencies (wCBDC), moved to the unified programmable platform development stage in September 2024.
