BISness A primer on tokenisation
Nov 27, 2025
John Frost, Head of Innovation at the Bank for International Settlements, and Morten Bech, Head of the BIS Innovation Hub Swiss Centre, dive into the transformative power of tokenization. They demystify how digital asset representation can enhance the financial system, enabling speedier and cheaper cross-border payments. The duo contrasts tokenized assets with cryptocurrencies, discusses Project Agora's innovative approach to wholesale payments, and highlights the challenges central banks face in adopting this technology. Their insights explore the promising future and complexities of tokenization.
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Programmable Representation Of Assets
- Tokenization digitally represents assets and encodes rules governing their transfer on programmable platforms.
- This enables conditional automation where actions occur only if specified conditions are met.
Distributed Ledgers Cut Reconciliation
- Any asset can be tokenized but some assets benefit more from the change in record-keeping and process automation.
- Distributed ledgers let all participants hold a copy, removing costly reconciliation steps between institutions.
Tokenized Assets Versus Cryptocurrencies
- Tokenized assets are claims or liabilities backed by underlying assets or issuers, unlike cryptocurrencies which are no one's liability.
- Cryptocurrencies derive value from scarcity and demand, whereas tokenized asset value comes from the underlying claim.