Project Promissa, a collaboration involving the Bank for International Settlements’ Innovation Hub, the Swiss National Bank, and the World Bank, has showcased the potential to redesign paper-based promissory notes using distributed ledger technology (DLT). This initiative aims to tackle the operational challenges that have rendered the existing process time-consuming and inefficient.
Since their inception, multilateral development banks (MDBs) like the World Bank have relied on promissory notes to manage and encash long-term financial commitments from member countries. Unfortunately, this process has been overly intricate and often requires constant reconciliation. The sheer volume of promissory notes handled by MDBs represents a substantial portion of the contributions pledged by their member countries.
The Project Promissa team developed a Proof of Concept (PoC) platform for tokenized promissory notes, which facilitates more efficient management across the lifecycle of these notes—from issuance to payment and archiving. This innovation not only automates manual processes but also reduces associated time and costs.
Morten Bech, head of the BIS Innovation Hub’s Swiss Centre, stated, “Project Promissa is a clear example of how blockchain can be used for the public good. Paper-based promissory notes have been utilized since the establishment of the Bretton Woods institutions, supporting crucial financing activities worldwide. The digital solutions tested by Promissa represent a significant advancement in modernizing this process in a cost-effective way.”
The DLT platform offers users a single source of truth, facilitates multiparty signatures, and guarantees confidentiality, while ensuring that each party retains ownership, control, and decision-making power over its promissory notes.
Participants from seven countries contributed to the testing phase, providing valuable feedback to refine the PoC.
Thomas Moser, an alternate member of the Governing Board of the Swiss National Bank, remarked, “As the custodian of Switzerland’s promissory notes, we appreciate the digitization of our operations through distributed ledger technology. Project Promissa presents a unique opportunity to modernize error-prone paper processes, creating a single source of truth that can significantly reduce reconciliation needs and enhance efficiency.”