The report notes tokenisation's benefits, such as lower costs and faster processing, alongside risks.
The BIS outlines four key considerations for central banks on tokenisation initiatives.
A report published today (Monday) by the Bank for
International Settlements (BIS) outlines the potential implications of money
tokenisation for central banks.
The report, prepared for the G20, is titled
Tokenisation in the Context of Money and Other Assets: Concepts and
Implications for Central Banks. It was developed with input from the BIS
Committee on Payment and Market Infrastructures (CPMI).
Tokenisation: Benefits and Risks
Tokenisation refers to creating digital representations of
traditional assets on programmable platforms. The report investigates the
global challenges in the regulated payments sector and the possible advantages
of tokenisation in reducing frictions in financial markets.
While tokenisation may
offer benefits such as lower costs and faster transactions, the report
emphasizes that risks must also be addressed.
It suggests that tokenisation
could change how pre- and post-trade functions are carried out for money and
other assets. Issues surrounding governance, legal frameworks, credit,
liquidity, custody, and operational risks will require careful attention.
“Tokenisation has significant potential to improve the
safety and efficiency of the financial system,” commented Agustín Carstens,
General Manager of the BIS.
“Central banks along with the private sector must continue
to explore novel technologies and develop solutions that are fit for purpose
for the future financial system. However, tokenisation also poses economic,
legal and technical challenges that must be addressed if it is to fulfil its
potential.”
Central Banks Address Tokenisation Challenges
The report warns that risks associated with tokenisation may
differ from those faced by conventional market infrastructures. It points out
that these arrangements could change how financial markets are structured and
operated.
The BIS report identifies four key considerations for
central banks. First, central banks must respond to ongoing private sector
tokenisation initiatives, particularly regarding market fragmentation. Second,
they need to assess trade-offs between different types of settlement assets
within token arrangements.
Third, it is crucial to identify and regulate tokenisation
arrangements that may require oversight. Finally, central banks should evaluate
how token arrangements could impact monetary policy, especially in relation to
the structure of regulated markets and the demand for various forms of money.
Fabio Panetta, Governor, Bank of Italy and Chair, CPMI,
commented: “As with existing payment, clearing and settlement systems, the
potential capacity of token arrangements to improve financial system safety and
efficiency will require sound governance and risk management.”
“The well known risks of existing systems apply, but these
risks may materialise in different ways due to the effects of token
arrangements on market structure.”
A report published today (Monday) by the Bank for
International Settlements (BIS) outlines the potential implications of money
tokenisation for central banks.
The report, prepared for the G20, is titled
Tokenisation in the Context of Money and Other Assets: Concepts and
Implications for Central Banks. It was developed with input from the BIS
Committee on Payment and Market Infrastructures (CPMI).
Tokenisation: Benefits and Risks
Tokenisation refers to creating digital representations of
traditional assets on programmable platforms. The report investigates the
global challenges in the regulated payments sector and the possible advantages
of tokenisation in reducing frictions in financial markets.
While tokenisation may
offer benefits such as lower costs and faster transactions, the report
emphasizes that risks must also be addressed.
It suggests that tokenisation
could change how pre- and post-trade functions are carried out for money and
other assets. Issues surrounding governance, legal frameworks, credit,
liquidity, custody, and operational risks will require careful attention.
“Tokenisation has significant potential to improve the
safety and efficiency of the financial system,” commented Agustín Carstens,
General Manager of the BIS.
“Central banks along with the private sector must continue
to explore novel technologies and develop solutions that are fit for purpose
for the future financial system. However, tokenisation also poses economic,
legal and technical challenges that must be addressed if it is to fulfil its
potential.”
Central Banks Address Tokenisation Challenges
The report warns that risks associated with tokenisation may
differ from those faced by conventional market infrastructures. It points out
that these arrangements could change how financial markets are structured and
operated.
The BIS report identifies four key considerations for
central banks. First, central banks must respond to ongoing private sector
tokenisation initiatives, particularly regarding market fragmentation. Second,
they need to assess trade-offs between different types of settlement assets
within token arrangements.
Third, it is crucial to identify and regulate tokenisation
arrangements that may require oversight. Finally, central banks should evaluate
how token arrangements could impact monetary policy, especially in relation to
the structure of regulated markets and the demand for various forms of money.
Fabio Panetta, Governor, Bank of Italy and Chair, CPMI,
commented: “As with existing payment, clearing and settlement systems, the
potential capacity of token arrangements to improve financial system safety and
efficiency will require sound governance and risk management.”
“The well known risks of existing systems apply, but these
risks may materialise in different ways due to the effects of token
arrangements on market structure.”
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The copy trading market is projected to double in size, growing from $2.2 billion to $4 billion by the end of this decade. In light of this, brokers and financial institutions are increasingly adopting PAMM, MAM, and Copy Trading solutions to scale operations and drive profitability. In this insightful webinar, Sergey Ryzhavin, Product Owner at B2COPY, outlines the advanced features of the B2COPY platform, showcasing how it enhances Copy Trading, PAMM, and MAM performance. Sergey also explores strategies for using these tools to attract new clients, improve customer engagement, and create additional revenue streams.
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