PANews reported on October 21 that the Bank for International Settlements (BIS) released a report on Monday titled 'Tokenization in the Context of Money and Other Assets: Concepts and Implications for Central Banks,' exploring how tokenization is reshaping the financial landscape and influencing the role of central banks. The report emphasizes that tokenization can bring significant benefits, such as reducing transaction costs and increasing transaction speed, which has piqued the interest of institutional investors; however, these advantages also come with inherent risks and challenges.

The report points out several risks associated with tokenization, including potential governance and legal framework issues, as well as credit, liquidity, custody, and operational risks. These challenges may be different from those faced by traditional market infrastructures, hence requiring central banks to conduct a comprehensive assessment. The report states: 'Central banks need to evaluate the trade-offs and appropriate balance between different types of settlement assets in token arrangements and identify, monitor, and assess tokenized arrangements that may need to be subject to sound regulation and oversight.'

The report from the Bank for International Settlements emphasizes the potential impact of token arrangements on the implementation of monetary policy, particularly regarding changes to regulated market structures and the demand for central bank currencies relative to other forms of money. This evolving situation may affect how central banks operate in the future. Agustín Carstens, General Manager of the Bank for International Settlements, pointed out that while tokenization can enhance the security and efficiency of the financial system, it also brings economic, legal, and technical challenges that must be addressed. The report notes that the legal risks of tokenization may arise from unintended or uncertain applications of the law.