Bank of Russia presents report on the tokenisation of cashless money

The Bank of Russia has presented a report, in which it has gathered the results of the international discussion on the tokenisation of cashless funds.

Potential benefits from the adoption of new payment instruments are directly linked to their use in systems based on smart contracts.

At the same time, the regulator believes that the technological sophistication and digital capabilities of tokenised monetary funds held on commercial bank accounts should not significantly lag behind the capabilities of CBDC.

“Tokenisation will preserve the attractiveness of money created by commercial banks for economic agents not only due to the payment of interest, but also thanks to the potential use of smart contracts,” the report says.

Among other benefits, the Central Bank lists reduced costs of operations through the automation of settlements, new opportunities for international payments, and for designing new services, including in the areas Web3 and the Internet of Things.

Moreover, tokenisation of cashless funds will become an alternative to monetary surrogates. The regulator regards cryptocurrencies and stablecoins as such.

The Bank also highlighted risks of the new instrument, including possible token vulnerabilities, loss of anonymity and transaction confidentiality, misconduct stemming from lack of oversight of smart contracts, and monopolisation.

Overall, the Bank of Russia concluded that maintaining the attractiveness of cashless money, including tokenised money, is a factor in preserving the lending potential of the economy by the banking sector.

Earlier, the Bank of Russia spoke of possible restrictions for the digital ruble.