The Impact of Tokenisation

David Birch has written about the presentation made by Sarah Breeden, Deputy Governor at the Bank of England, at the Swiss National Bank’s event ‘Towards the future of the monetary system’. In it she described two waves of benefits from tokenisation. In the short term it will bring greater efficiency to the existing payment and settlement system. In the longer term she sees radical change to post-trade processes.

She referred to a fully digital infrastructure of real-world asset tokenisation and decentralised finance protocols that will reshape financial markets by creating accessible and tradeable assets. The new infrastructure will consolidate distribution, trading, clearing and settlement in a single layer, meaning more streamlined (ie. less expensive) financial intermediation.

The move towards the tokenisation of real-world assets and the trading of these for money in 24/7 decentralised markets is a vision of future global financial market infrastructure (FMI) that requires a solid legal framework in place, and soon. This infrastructure is already under construction.