BISness The next-generation monetary and financial system
Jun 24, 2025
Hyun Song Shin, Economic Advisor and Head of the Monetary and Economic Department at the BIS, discusses the future of finance through tokenization. He explores how tokenized platforms can integrate central bank reserves and commercial bank money. The conversation highlights the balance between public interest and private innovation. Challenges posed by stablecoins and their impact on monetary function are addressed. Shin also emphasizes how tokenization can revolutionize international banking and enhance monetary policy management.
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Tokenization's Role in Monetary Systems
- Tokenization records traditional ledger claims on programmable platforms, enabling integrated messaging, reconciliation, and asset transfer.
- This allows conditional transactions that eliminate counterparty risk and improve monetary system functionality.
Central Banks and Money's Core Benefits
- Central banks ensure money's singleness and settlement via a two-tier system with customer-facing intermediaries.
- Elasticity in money creation through overdrafts enables timely payments despite liquidity gaps.
Stablecoins' Monetary Limitations
- Stablecoins lack singleness because each issuer's token is distinct and may vary in value.
- They cannot provide elasticity or strong integrity safeguards due to lack of overdraft features and being on public blockchains.