BIS working paper: Leveraging tokenisation for payments and financial transactions

Report by the Consultative Group on Innovation and the Digital Economy (CGIDE) established at the BIS Representative Office for the Americas.

This report by the Consultative Group on Innovation and the Digital Economy (CGIDE) discusses theoretical and real-world use cases of tokenisation, which include initiatives run by the Central Bank of Brazil and the Central Bank of Colombia, and private sector-led initiatives discussed within the CGIDE during 2023-24. In addition to use cases and progress to date, the report also explores some preconditions and other considerations for tokenisation.

The report does not represent a policy position of CGIDE members and observers on the design or implementation of tokenisation in payments and the financial sector. Instead, it is offered as a public good to advance the work on these issues and to share insights from a group of experts in the Americas.

Context

Tokenisation has the potential to reshape the financial system. It can have significant implications for payments and financial markets, offering increased efficiency, transparency and accessibility. In this regard, central banks play a key role in accommodating new technologies and ensuring market equilibrium, while also preserving the singleness of money. The advantages of tokenisation can be exploited in the context of unified ledgers, integrating central bank money, commercial bank money and other assets, to streamline operations and enhance overall efficiency.

The Consultative Group on Innovation and the Digital Economy (CGIDE) was launched in February 2020 to meet the demand for greater cooperation in technological innovation and the digital economy by BIS member central banks in the Americas. It reports to the Consultative Council for the Americas (CCA), which brings together the Governors of the central banks of Argentina, Brazil, Canada, Chile, Colombia, Mexico, Peru and the United States (Board of Governors of the Federal Reserve System and Federal Reserve Bank of New York).

This group provides a forum where senior central bank officials can cooperate in pursuit of the following objectives:
. analysing and developing public technological infrastructures geared towards tackling common shortcomings in all participating jurisdictions;
. promoting an environment suitable to open banking, potentially through the development of key application programming interfaces (APIs); and
. analysing these public technological infrastructures in terms of market structure and regulatory implications.

This report was prepared by a technical task force of central bank experts, chaired by Fabio Araujo (Central Bank of Brazil), which was launched in March 2024. It does not represent an expression of the policy position of central bank experts in the Americas region regarding tokenisation. Its main purpose is to open the discussion about asset tokenisation and its role in integrated financial ecosystems and to report on the experiments being conducted in the region. It also aims to serve as a reference for central banks, providing insights into the benefits and challenges of tokenisation and its potential for the financial system. The report seeks feedback from central banks and the public.