Tokenization could make finance faster, but also more susceptible to shocks, IMF says
The IMF warns that while tokenizing financial assets can eliminate settlement delays and increase efficiency, it also removes critical safety buffers that protect the financial system. This shift could lead to faster propagation of market shocks and increased systemic risk due to the concentration of activity on shared digital ledgers.
Why it matters
As financial institutions move toward real-time settlement, the lack of regulatory frameworks and the potential for automated, rapid-fire market failures pose significant threats to global financial stability.
"Frictions disappear — but so do buffers," Tobias Adrian, the IMF's head of monetary and capital markets, wrote in a blog post .
The article objectively reports on a formal IMF blog post, presenting both the technological benefits and the systemic risks without taking a partisan stance.
Get smarter about the news
Sign up free for a feed built around what you actually care about, Dive Deeper research on any story, and the full text of every article.
Create free accountAlready have an account? Sign in