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A new innovation centre for the world’s central bankers will study how a digital currency issued through a blockchain-based system might work.

The Bank for International Settlements (BIS) announced that it has signed an operational agreement with the Swiss National Bank (SNB) establishing one of three planned BIS Innovation Hub Centres in Switzerland. It will also be launching similar units in Singapore and Hong Kong.

The innovation hubs will study trends in technology affecting central banking, develop tech solutions designed to improve the functioning of the global financial system and serve as venues for central bankers to innovate.

The BIS announced that its Swiss centre will initially embark on two research projects.

One of these projects — which will involve a collaboration between the SNB and Zurich-based exchange company SIX Group — will study integrating digital central bank money into a distributed ledger technology infrastructure.

“This new form of digital central bank money would be aimed at facilitating the settlement of tokenized assets between financial institutions,” the BIS said.

The other project will examine the requirements for central banks to effectively monitor fast-paced electronic markets.

“These requirements arise in particular from the greater automation and fragmentation of the financial markets, but also from the increased use of new technologies,” the BIS said.

“Through the cooperation at the BIS Innovation Hub Centre in Switzerland, the SNB will be able to further expand its expertise in the area of financial markets and their infrastructures,” said Thomas Jordan, chairman of the governing board of the SNB. “We look forward to bolstering our collaboration with the BIS and other central banks in this space.”