December 2024
1. Tokenization offers potential but faces adoption challenges: While tokenization has shown promise in enhancing financial instruments, key challenges such as integrating with legacy systems, regulatory support, high switching costs, and achieving liquidity remain.
2. Strong foundations are necessary but not sufficient for success: Adoption of digital assets requires a robust legal framework, scalable and interoperable DLT infrastructure, and secure settlement assets like CBDCs. However, the market is fragmented, and strong incentives are needed for widespread adoption.
3. Managing the transition to a tokenized financial system: Successful transition involves spreading benefits across private and public participants, coordinated efforts between market participants, central banks, and regulators, and addressing the complexities of integrating new technology with existing systems.
In today's rapidly evolving financial landscape, tokenization is helping to reshape traditional financial instruments issued by sovereign and corporate entities. The transformative potential is exemplified by several digital bonds issuances as part of . Also, Project aims to tokenize promissory notes that are instrumental in raising funds for the World Bank and other international financial institutions.
The roundtable explores two aspects: first, the transformative impact of tokenizing financial instruments, such as liquidity, accessibility, transparency, and efficiency. Second, the multifaceted challenges of tokenization, ranging from technical aspects such as security, privacy and interoperability, to regulation and compliance and coordination between diverse actors in the financial markets.
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