Report: Tokenization’s impact remains uncertain

A new report outlines the opportunities, risk, and future considerations for tokenization, or the process of generating and recording a digital representation of traditional assets on a programmable platform.

Highlights: The Bank for International Settlements report contends that token arrangements may facilitate the availability of different assets or currencies and the ability to combine multiple functions on a single programmable platform, which could streamline complex transactions processing.

More: The report notes a range of available options for central banks considering token arrangements, including:

• Connecting existing central bank payment systems to outside token arrangements.

• Providing a tokenized form of central bank money on programmable platforms that are operated by the central bank.

• Providing a tokenized form of central bank money on the same multi-asset platforms where tokenized deposits reside.

Global Project: More than 40 private-sector companies recently joined central banks in Project Agorá, a large industry experiment to test whether tokenized deposits can improve cross-border payments.

ICBA View: ICBA has repeatedly expressed opposition to the creation of a U.S. central bank digital currency, requesting from U.S. agencies federal records on whether legislative changes are required to issue a U.S. CBDC.