IMF: Policy choices will decide tokenization’s impact

Tobias Adrian, director of the IMF's Monetary and Capital Markets Department, wrote in an IMF blog post on Thursday that policy decisions on money, market infrastructure and legal frameworks will shape whether tokenization strengthens or fragments the financial system as assets move onto shared digital ledgers.

The IMF said tokenization compresses execution, clearing and settlement into near-simultaneous processes governed by software. The fund warned that risks could shift from bank balance sheets to platforms, software code and market infrastructure providers.

The report identified three emerging types of settlement assets in a tokenized economy: tokenized bank deposits, stablecoins and tokenized central bank reserves.

Tokenized deposits keep existing banking structures while allowing atomic settlement and more efficient liquidity management. Continuous settlement, however, raises the need for real-time liquidity backstops.

Stablecoins offer programmability and global reach but their reliability depends on reserve quality, market liquidity and the ability of issuers to maintain parity with other forms of money.

Tokenized central bank reserves remove credit risk from settlement assets but require central banks to operate or oversee programmable infrastructures that extend beyond traditional payment systems.

The IMF said tokenization will change banks’ activities rather than eliminate banks. Tokenized deposits could combine payments, client settlement and treasury functions on shared ledgers. Tokenized lending can encode interest accrual and collateral rules into smart contracts and allow continuous risk monitoring.

Capital markets are also affected. Tokenized securities can integrate issuance, trading, settlement, custody and compliance into single workflows, lowering some counterparty risks while increasing continuous liquidity demands and automated margin calls. “Collateralized markets may be among the earliest beneficiaries,” Adrian wrote. He added that “when infrastructure becomes the central hub, governance failures become systemic events.”

The IMF highlighted platform concentration and interoperability as key concerns. Permissioned shared ledgers could concentrate activity on fewer platforms, improving liquidity and operational efficiency but raising the stakes for cybersecurity, resilience and crisis management. Weak links between platforms could trap liquidity and reintroduce systemic risks.

Around-the-clock, instantaneous settlement challenges market structures built on business-day cycles and may require liquidity backstops that operate directly on tokenized infrastructures. Oversight frameworks will need to extend beyond traditional institutions to include smart contracts, and legal systems must clarify ownership rights, settlement finality and jurisdictional standards.

For emerging and developing economies, the IMF said tokenization could reduce cross-border payment costs and widen market access. The fund warned that broad adoption of privately issued global stablecoins could accelerate capital flows and lead to currency substitution. The IMF called for strong domestic frameworks and international coordination to manage those risks and support financial stability.