Tobias Adrian

Writing in a blog published by the International Monetary Fund, Adrian said tokenisation should be viewed as more than simply a way to speed up payments or settle trades faster.

Instead, he argued that moving financial assets and liabilities onto shared digital ledgers would change how financial markets operate by allowing transactions, clearing and settlement to happen simultaneously through software rather than traditional institutional processes.

While this could reduce costs, improve efficiency and enable faster cross-border payments, Adrian warned it would also remove many of the buffers built into today’s financial system, potentially allowing liquidity shortages and market stress to spread more quickly.

He said risks could also shift away from banks and investment firms towards the companies operating tokenised platforms and the smart contracts that underpin them, creating new areas that regulators will need to oversee.

The blog says tokenisation raises important questions over the future role of commercial bank deposits, stablecoins and central bank money in financial markets, as well as the legal status of tokenised assets and the resilience of digital infrastructure.

Adrian said emerging economies could benefit from cheaper cross-border payments and improved access to capital markets, but warned that rapid cross-border movement of tokenised assets could also increase the risk of volatile capital flows, currency substitution and reduced monetary sovereignty.

He concluded that policymakers face crucial decisions over the balance between public and private money, interoperability between platforms and regulatory oversight, arguing that the choices made now will determine whether tokenisation supports financial stability or fragments the global financial architecture.