Tokenization could make finance faster, but also more susceptible to shocks, IMF says
Tokenization could make finance faster and cheaper. It also makes it more vulnerable to sudden shocks, the International Monetary Fund said.
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Summary
- Tokenization represents assets like stocks, bonds and bank deposits on blockchain ledgers, enabling instant trades, ownership transfers and payment through smart contracts.
- It also removes the time buffers that slow the spread of shocks in traditional finance, the IMF warned.
- Without updated regulations, tokenization could amplify systemic risks, concentration, cybersecurity threats and volatile cross-border flows, especially in emerging economies, the financial institution said.
