Experts from the Bank for International Settlements (BIS) called tokenisation based on CBDC the future of the global financial system, and cryptocurrencies — a mistaken branch of this process.
A #UnifiedLedger – a new type of financial market infrastructure – can harness the benefits of tokenisation by combining #CBDC, #TokenisedDeposits and #TokenisedAssets in shared programmable platforms. #BISAnnualEconReporthttps://t.co/eKJVwQjpqJ pic.twitter.com/9VcumPPWv5
— Bank for International Settlements (@BIS_org) June 20, 2023
In the BIS’s Annual Economic Report, BIS specialists noted that the previous leap in the development of monetary relations was driven by the emergence of financial instruments in the form of ledger entries. With the advent of the electronic era they acquired digital form, giving impetus to the dematerialisation of money.
“Today the monetary system stands on the cusp of another major leap. After dematerialisation and digitisation, tokenisation has become the key event — the process of representing claims in digital form on a programmable platform,” BIS says.
According to experts, cryptocurrencies “have given a sense of the prospects for tokenisation,” but themselves are a mistaken system and cannot assume the role of money of the future.
“Cryptocurrency is not only self-referential, hardly interacts with the real world, but also has no anchor of trust to money provided by the central bank. At the same time, as stablecoins proliferated to fill this vacuum,” they noted.
The BIS outlined a plan for a future monetary system, whose key elements will be CBDCs, tokenised deposits and other requirements for financial and real assets. The unifying component will be a new type of market infrastructure — a “unified registry”. The platform could enable the integration of several registries, operating in a “network of networks” mode.
“This will enable the full benefits of tokenisation through the finality of settlements deriving from central-bank money. Drawing on trust in the central bank, such a joint solution has strong potential to strengthen the monetary and financial system,” the institution’s experts emphasised.
In the BIS’s previous annual report, BIS specialists stated that the foundation of future innovative monetary systems will be CBDCs, not cryptocurrencies with their systemic shortcomings.
As Bernstein Asset Management estimates, over the next five years tokenised assets worth $5 trillion could be tokenised, including 2% of the global money supply.