IMF says policy, not technology, will decide tokenisation’s fate for global finance #

The International Monetary Fund has cautioned that the spread of tokenisation could reshape the plumbing of global finance, and that policymakers will ultimately decide whether the technology strengthens the system or splinters it. According to a blog post by Tobias Adrian, director of the IMF’s Monetary and Capital Markets Department, decisions on money, market infrastructure and legal frameworks will be decisive as financial assets migrate onto shared digital ledgers.

Adrian argued that tokenisation is more than a faster payment rail, describing it as a structural change in financial architecture. Moving assets and liabilities onto common ledgers, he wrote, compresses execution, clearing and settlement into near-simultaneous processes governed by software. The IMF cautioned that this could concentrate risk in platforms, code and market infrastructure providers rather than on the balance sheets of traditional intermediaries.

The report examines three emerging settlement-asset models, each carrying distinct risks that Adrian suggested current rulebooks are not built to handle. Tokenised bank deposits preserve the existing regulatory perimeter but demand real-time liquidity management around the clock. Stablecoins offer programmability and broad reach but remain dependent on the quality of their reserves and the resilience of their issuers to hold their pegs. Tokenised central bank reserves remove credit risk from the settlement layer, yet would require central banks to operate or oversee programmable infrastructures well beyond conventional payment systems.

For emerging economies, the IMF flagged a particular danger: rapid currency substitution and an erosion of monetary sovereignty should privately issued stablecoins expand without adequate domestic safeguards.

Adrian stressed that tokenisation is likely to change banks rather than eliminate them. Tokenised deposits could merge payments, client settlement and treasury functions on shared ledgers, while tokenised lending could embed interest accrual and collateral terms into smart contracts, enabling continuous risk monitoring. Capital markets face a comparable shift, with tokenised securities folding issuance, trading, settlement, custody and compliance into integrated workflows. That could cut counterparty risk but increase demand for continuous liquidity and automated margining.

The IMF’s overarching message, according to the blog post, is that the outcome hinges on policy rather than technology alone, urging authorities to update frameworks before assets move onto automated systems at scale.

Source: The Block