BIS – Tokenisation in the Context of Money and Other Assets, Oct 2024

The Bank for International Settlements (BIS) released the report "Tokenisation in the Context of Money and Other Assets: Concepts and Implications for Central Banks" in October 2024, examining the growing relevance of tokenisation in regulated financial markets and its potential impact on central banks. The report defines tokenisation as the process of generating and recording digital representations of traditional assets on programmable platforms, which can alter existing market structures by providing platform-based intermediation across the end-to-end lifecycle of financial assets. While tokenisation may reduce transaction costs and enable innovative use cases, it also presents challenges such as legal uncertainties, regulatory fragmentation, and the concentration of power within dominant platforms. The BIS emphasizes that the potential of token arrangements to improve the safety and efficiency of the financial system will require sound governance and risk management. The report identifies four key considerations for central banks: responding to ongoing private sector tokenisation initiatives, assessing trade-offs between different types of settlement assets, ensuring sound regulation and oversight, and evaluating the impact on monetary policy implementation.