Tokenisation with a Unified Ledger can Be the Future for Money: BIS

Stablecoins in their current form introduce fragmentation, monetary policy risks and could undermine trust in money, without central banks involvement, however, tokenisation, together with a unified ledger anchored by central bank reserves could provide a blueprint for the future of the global monetary system, according to a speech by Frank Smets, acting head of the Monetary and Economic Department and head of economic analysis and statistics at the BIS.

The remarks come after the central banks’ central bank published its annual review that included a chapter about digital assets and their role in the financial system. The speech outlined key dangers and opportunities, including the proposed framework for a two-tier system that ensures the integrity of money and encourages innovation.

Smets said that tokenisation can align messaging, compliance checks and settlement into a coordinated, atomic transaction and reduce errors and delays but it needs to be anchored in central bank reserves to be effective. The so-called integrity by design feature, which is currently missing, could be achieved by embedding jurisdiction-specific governance, pre-screening, sanctions checks and auditable trails.

In this model, tokenised central bank reserves provide the trusted settlement medium and anchor singleness, while tokenised deposits build on the proven two-tier model where private innovation thrives. This ledger can support additional regulated private monies, provided that participation is conditioned on strong safeguards.

“The public-private prototype Project Agorá shows that atomic, cross-currency settlement […] is feasible,” Smets said.  “A unified ledger anchored by central bank reserves can provide an organising principle for money in the digital era.”

Smets highlighted that addressing the weaknesses in today’s stablecoin arrangements and bringing the benefits of tokenisation into the trusted two‑tier system anchored in central bank money are key priorities for policymakers.

He added that practical choices about reserves, access and governance models, liquidity facilities and legal framework, will determine whether stablecoins emerge as a form of money, or remain resembling ETF-like structures.