London, November 28, 2023- In a landmark move, the International Monetary Fund (IMF), the World Bank, and the Bank for International Settlements (BIS) have announced a collaboration to explore the potential of tokenization in streamlining and enhancing their operations.1 This marks the first time these three cornerstone institutions have joined forces to venture into the realm of blockchain technology.
Tokenization is the process of converting traditional assets into digital tokens and could bring about paradigm shifts in financial landscapes.
The trio will also work with Switzerland’s central bank which has been pioneering tokenisation, the process of turning conventional assets into uniquely coded “tokens” that can be used in faster new systems, a report said. 2
By digitizing financial instruments, tokenization can create better efficiency, transparency, and security in cross-border transactions.
The collaboration is expected to initially focus on tokenizing simple yet paper-based processes, such as donations from richer countries to the World Bank’s funds for supporting poorer countries.
This initial step will pave the way for exploring more complex tokenization applications across the three institutions, a report said.
“This collaboration represents a significant step towards harnessing the transformative power of tokenization for the betterment of global finance,” remarked a spokesperson for the IMF.
“We are excited to work alongside our partners at the World Bank and BIS to unlock the potential of this technology and drive innovation in the global financial system.”
The World Bank emphasized the potential of tokenization to enhance financial inclusion and promote sustainable development.
“Effective oversight and regulatory frameworks are essential to ensure the safe and sound adoption of tokenization,” noted a BIS official. 2
“Working together with the IMF and World Bank, we can foster a collaborative approach to address the regulatory challenges and opportunities presented by this technology.”
This collaboration is seen as a turning point in the adoption of tokenization by international financial institutions. This is also seen as giving more recognition to digital currency and other related financial technologies.
- Reuters: https://www.reuters.com/markets/imf-world-bank-bis-first-tokenisation-collaboration-2023-11-28/[↩]
- Yahoo Finance: https://ca.finance.yahoo.com/news/imf-world-bank-bis-first-172234041.html[↩][↩]
