Tokenization is one of the concepts most linked to the adoption of cryptos. In the finance sector, for example, this notion manifests itself in particular through decentralized finance (DeFi). The potential of the latter being increasingly recognized, the Bank of England intends to integrate it into its monetary policy.
The Bank of England, pragmatic about tokenization?
The tokenization of financial assets is gaining momentum in England. A dynamic that confirms the growing enthusiasm of investors for cryptos. For the Bank of England (BoE), it is not a question of denying this fact, but of accepting it by preparing for it.
This is essentially the message sent by Sir Jon Cunliffe, Deputy Governor of the BoE. It was during the Innovative Finance Global Summit held in London on Monday 17 April.
The banker gave explanations about how the UK central bank is preparing for this development. Concretely, the financial institution is exploring the possibilities of tokenization of bank money. An analysis that takes into account non-bank currencies, such as stocks and mutual funds, and CBDCs.
BoE is mainly studying how tokenized financial assets interact with each other. The objective for her being to determine the most relevant option for their integration into the financial system. This, without risking a destabilization of the economy.
With this in mind, a few tokenization options seem to stand out. This is particularly the case for stablecoins which, according to Cunliffe, “offer the possibility of greater efficiency and better functionality in payments”.
This is also the case with central bank digital currencies (CBDCs) and tokenized bank deposits. These latter would be “a much simpler proposition than non-bank stablecoins”. A benefit that would allow bank deposits “to better compete with non-bank payment coins”.
For the vice manager, the major issue of tokenization remains regulation. He believes that, without the latter, a relevant integration of financial assets would be “extremely unlikely”.
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A graduate of Sciences Po Toulouse and holder of a blockchain consultant certification issued by Alyra, I joined the Cointribune adventure in 2019. Convinced of the potential of the blockchain to transform many sectors of the economy, I took the commitment to raise awareness and inform the general public about this constantly evolving ecosystem. My goal is to enable everyone to better understand the blockchain and seize the opportunities it offers. I strive every day to provide an objective analysis of the news, to decipher market trends, to relay the latest technological innovations and to put into perspective the economic and societal challenges of this revolution in progress.
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