Tobias Adrian, IMF Monetary and Capital Markets Director, stated Thursday that policy choices will determine tokenization's impact on financial systems. Adrian wrote in an IMF blog post that moving financial assets and liabilities onto common ledgers compresses execution, clearing, and settlement into simultaneous processes governed by software. The transition could concentrate risks in platforms, code, and market infrastructure providers rather than the balance sheets of traditional intermediaries, he added.
IMF Identifies Three Forms of Settlement Assets in Tokenized Economy
According to the report, three forms of settlement assets are emerging in a tokenized economy: tokenized bank deposits, stablecoins, and tokenized central bank reserves. Adrian said tokenized deposits retain existing banking frameworks while enabling atomic settlement and more efficient liquidity management, though continuous settlement increases the need for real-time liquidity backstops. Stablecoins provide programmability and global reach but depend on reserve quality, market liquidity, and issuer resilience to maintain parity with other forms of money, he wrote. On tokenized central bank reserves, Adrian said the instruments remove credit risk from settlement assets but require central banks to operate or oversee programmable infrastructures beyond traditional payment systems.
Tokenization Alters Banks Rather Than Eliminates Them
Adrian said tokenization will alter banks rather than eliminate them. Tokenized deposits could combine payments, client settlement, and treasury functions on shared ledgers, while tokenized lending embeds interest accrual and collateral requirements into smart contracts and allows continuous risk monitoring. Capital markets face a similar shift, according to the report. Tokenized securities combine issuance, trading, settlement, custody, and compliance within integrated workflows, reducing counterparty risk while increasing continuous liquidity demands and automated margin requirements.
Permissioned Shared Ledgers Concentrate Activity on Fewer Platforms
Adrian wrote that collateralized markets may be among the earliest beneficiaries, as high-quality assets can be mobilized quickly and across platforms. He added that when infrastructure becomes the central hub, governance failures become systemic events. The report said permissioned shared ledgers could concentrate activity on fewer platforms, improving liquidity and operational efficiency while increasing the importance of cybersecurity, resilience, and crisis management. Adrian identified interoperability as a critical requirement, noting that weak links between platforms could trap liquidity and reintroduce risks across the financial system. Adrian added that instantaneous, around-the-clock settlement challenges existing market structures built around business-day cycles. The report added that oversight frameworks will need to extend beyond institutions to smart contracts themselves, while legal systems must clarify ownership rights, settlement finality, and jurisdictional standards.
IMF Highlights Tokenization Risks for Emerging Economies
For emerging and developing economies, Adrian said tokenization could lower the cost of cross-border payments and improve market access, but also accelerate capital movements and currency substitution if privately issued global stablecoins gain wider use. The report noted that strong domestic frameworks and international coordination remain essential safeguards.
FAQ
What did Tobias Adrian say about tokenization on Thursday?
Tobias Adrian, IMF Monetary and Capital Markets Director, stated Thursday that policy decisions on money, market infrastructure, and legal frameworks will determine whether tokenization strengthens or fragments the financial system as assets migrate onto shared digital ledgers.
What are the three forms of settlement assets emerging in a tokenized economy?
According to the IMF report, three forms of settlement assets are emerging: tokenized bank deposits, stablecoins, and tokenized central bank reserves. Tokenized deposits retain existing banking frameworks while enabling atomic settlement. Stablecoins provide programmability and global reach but depend on reserve quality and issuer resilience. Tokenized central bank reserves remove credit risk from settlement assets but require central banks to operate or oversee programmable infrastructures beyond traditional payment systems.
How does tokenization affect emerging economies according to the IMF?
Adrian said tokenization could lower the cost of cross-border payments and improve market access for emerging and developing economies, but also accelerate capital movements and currency substitution if privately issued global stablecoins gain wider use. The report noted that strong domestic frameworks and international coordination remain essential safeguards.
