Conclusion
- Cash-on-ledger frameworks are critical for bridging tokenized assets and traditional systems, ensuring secure and instant settlement. Their role in DvP highlights their importance in strengthening trust and reliability across markets
- Interoperability remains a fundamental challenge, requiring standardized protocols and collaborative frameworks to address fragmentation in DLT networks. Initiatives like consortium blockchains and interoperable settlement systems are instrumental in overcoming these barriers.
- Collaboration between public and private entities is essential to establish common standards, ensure compliance, and streamline processes, fostering widespread adoption of tokenized systems.
- Tokenization's full potential lies beyond cost reduction and pilot programs. By investing in the transformation of real-world processes, such as using tokenized money market funds for collateral management in derivatives markets like intraday repos and perpetual swaps, organizations can unlock new efficiencies and opportunities, showcasing the broader impact of this technology.
1 Global Financial Markets Association (GFMA). (2023, May 17). The impact of distributed ledger technology in global capital markets. GFMA. https://www.gfma.org/policies-resources/gfma-publishes-report-on-impact-of-dlt-in-global-capital-markets/
2 New York Times Events. (2024, January 24). BlackRock C.E.O. Larry Fink on ESG Investing [Video]. YouTube. https://www.youtube.com/watch?v=PSVpth7uqb4
3 UBS Asset Management. (2024, November 1). UBS Asset Management launches its first tokenized investment fund. UBS. Retrieved from: https://www.ubs.com/global/en/media/display-page-ndp/en-20241101-first-tokenized-investment-fund.html
4 HQLAx. (2024). HQLAx New brochure for website Dec 2024 – Redefining Collateral Mobility. [PDF]. Retrieved from: https://cdn.prod.website-files.com/647085cadeace073b850ba3c/6752c5245abd90149a74af43_HQLA%E1%B5%A1%20New%20brochure%20for%20website%20Dec%202024%20-%20final%20%20-%20%20Read-Only.pdf
5 Bank of England. (n.d.). Cross-border payments. Bank of England. Retrieved Feb 2025, from https://www.bankofengland.co.uk/payment-and-settlement/cross-border-payments
6 Citigroup. (n.d.). Money, tokens, and games. Citigroup. Retrieved Feb 2025, from https://www.citigroup.com/global/insights/money-tokens-and-games
7 Di Iorio, A., Kosse, A., & Mattei, I. (2024). Embracing diversity, advancing together: Results of the 2023 BIS survey on central bank digital currencies and crypto (BIS Papers No. 147). Bank for International Settlements. https://www.bis.org/publ/bppdf/bispap147.pdf
8 Bank for International Settlements. (2024, September 16). Private sector partners join Project Agorá. BIS. Retrieved from https://www.bis.org/about/bisih/topics/fmis/agora.htm
9 Securities Industry and Financial Markets Association (SIFMA). (2024, December). Regulated Settlement Network: Business Applicability Report. SIFMA. Retrieved from https://www.sifma.org/wp-content/uploads/2024/12/RSN-Business-Applicability-Report-FINAL.pdf