The BIS report emphasizes that major financial institutions are piloting tokenized deposits to improve settlement efficiency and programmability, but the shift from traditional finance to tokenization may involve risks, 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 infrastructure, so a comprehensive assessment by the central bank is required.
Of course, tokenization also has many benefits, including reducing transaction costs and speeding up transactions. Governance, legal and liquidity risks are the focus of central banks' attention on tokenized assets. (TheBlock)