For more than a decade, the public conversation about digital money has revolved around cryptocurrency prices. Bitcoin rises, a token collapses, a new cycle begins, and attention follows the speculation.
Behind those headlines, a quieter and potentially more important transformation is taking place.
Banks, central banks and financial institutions are experimenting with tokenisation: representing money and financial assets as digital tokens that can move across programmable platforms. The aim is not merely to create another asset to trade. It is to rebuild the machinery of finance so that payments, ownership and settlement can happen more quickly, transparently and automatically.
The Bank for International Settlements, or BIS, made this one of the central themes of its 2026 Annual Economic Report. Its argument is clear: digital innovation can improve finance, but the most durable system is likely to combine new technology with the trust architecture of central bank money, regulated banks and sound institutions.
That distinction matters. The future of money may borrow some of crypto’s technology without adopting its entire philosophy.
What tokenisation actually changes
Most financial assets are already digital. Your bank balance is an electronic record, and shares are rarely represented by paper certificates. Tokenisation is therefore not simply the conversion of something physical into data.
The deeper change is that a token can combine the asset, its ownership record and the rules governing its transfer on a shared programmable system.
Imagine a bond that automatically pays interest to its current owner, a trade in which the asset and payment change hands at precisely the same moment, or a cross-border transaction that settles outside normal banking hours once agreed conditions are met.
Today, many financial transactions move through separate ledgers, intermediaries and reconciliation processes. One institution updates its records, another confirms the payment, and several parties check that their versions of the transaction agree. This system works, but it can be slow, costly and operationally complex.
Tokenisation offers a different model: assets and money can exist on compatible digital rails, allowing more of the transaction to occur as a single coordinated process.
The difference between stablecoins and tokenised deposits
Not all forms of digital money are the same.
A stablecoin is generally issued by a private entity and designed to maintain a fixed value against a currency such as the US dollar. It can move across a blockchain and connect easily with digital-asset applications. That programmability and global reach explain much of its appeal.
A tokenised deposit, by contrast, is a commercial bank deposit represented on a programmable ledger. It remains a liability of the issuing bank and is intended to be redeemable at par with an ordinary deposit.
The distinction may sound technical, but it goes to the heart of what makes money trustworthy.
In the conventional banking system, different forms of money—cash, central bank reserves and deposits at different banks—are expected to exchange at the same face value. A dollar is treated as a dollar. Central banks, deposit regulation, settlement systems and bank supervision help preserve that uniformity.
Stablecoins can sometimes trade above or below their intended peg. They may also differ in the quality, liquidity and custody of the assets backing them. If many private forms of digital money circulate at different values, money becomes fragmented.
The BIS therefore argues that innovation should remain anchored in central bank money. In practical terms, private digital money can play a role, but the system needs a trusted settlement asset and clear rules connecting one issuer’s money to another.
Why cross-border payments are an early opportunity
International payments reveal many of the weaknesses in today’s financial plumbing.
A payment may pass through several correspondent banks, each updating its own ledger and performing compliance checks. The sender may face uncertain fees, limited visibility and delays caused by time zones or operating hours.
Project Agorá, a collaboration convened by the BIS and the Institute of International Finance, has explored whether tokenised commercial bank deposits and central bank reserves can operate on a shared multi-currency platform. In May 2026, the project reported that tokenisation could help address inefficiencies in wholesale cross-border payments and announced that the work would advance towards testing with real value.
The important concept is atomic settlement. Instead of one side of a transaction occurring before the other, the two sides can be linked so that both happen together—or neither happens. That can reduce settlement risk and the amount of capital tied up while institutions wait for transactions to complete.
For businesses, the eventual benefits could include faster treasury operations, better visibility over cash and payments that execute automatically when contractual conditions are satisfied.
What tokenisation could mean for investors
Tokenisation is often marketed as a way to fractionalise expensive assets. A building, private-credit fund or work of art could theoretically be divided into smaller digital units, lowering the minimum investment.
That may broaden access, but smaller units do not automatically create a good investment.
Liquidity still depends on willing buyers and sellers. Valuation still depends on reliable information. Legal ownership must be enforceable. The underlying asset can still lose value. A token may make an asset easier to transfer without making it safer, more transparent or more profitable.
The more compelling long-term opportunity may be structural rather than speculative:
- shorter settlement times and lower operational costs;
- markets that operate for longer hours;
- automated income distributions and corporate actions;
- more efficient use of collateral;
- improved transparency over ownership and transaction history; and
- new financial products built from programmable assets and payments.
If these benefits materialise at scale, value may accrue to the institutions that own the trusted infrastructure: exchanges, custodians, banks, asset servicers, identity providers, cybersecurity firms and software platforms that connect tokenised networks with the wider economy.
Investors should also watch companies that can reduce real costs or improve capital efficiency through tokenisation. Announcing a pilot is easy. Changing the economics of a large, regulated workflow is much harder—and more valuable.
The risks are not side issues
New financial rails do not remove old financial risks. They can move them or make them travel faster.
A tokenised asset may contain flawed code. A digital wallet can be compromised. An operational failure can interrupt access. Different platforms may not communicate smoothly. Legal claims may become uncertain across jurisdictions. A supposedly liquid token can become difficult to sell during stress.
Stablecoins introduce additional questions. What backs the coin? Where are the reserves held? Can holders redeem promptly at par? What happens if many people redeem at once? Could reserve sales amplify stress in short-term funding markets?
There are broader economic effects too. Because the overwhelming majority of stablecoin value is denominated in US dollars, wider adoption could reinforce the dollar’s international role. In economies with weaker currencies, households and businesses may shift savings into dollar stablecoins, affecting local bank funding and monetary policy.
The technology can make money more programmable, but governance determines whose instructions it follows, who can reverse an error and who bears the loss when something fails.
How to separate infrastructure from hype
The tokenisation theme will attract grand claims, just as blockchain and crypto did before it. A disciplined investor can use a simple set of questions:
- What problem is being solved? Faster settlement, lower reconciliation costs and better collateral management are concrete. “Putting it on-chain” is not a business case by itself.
- Why is a token necessary? Some processes can be improved with conventional databases and APIs. The new architecture should create a measurable advantage.
- What is the legal claim? Ownership of a token must correspond clearly to enforceable rights over the underlying money or asset.
- Where does trust come from? Examine the issuer, reserves, custodian, settlement asset, governance and regulatory framework.
- Can the system connect with others? A perfect platform with no interoperability may simply create another financial silo.
- Are the economics visible? Look for lower costs, faster turnover, reduced capital needs, increased revenue or better customer outcomes.
This framework shifts attention away from token prices and towards the quality of the machine being built.
The real revolution is in the rails
Money is not valuable merely because it is scarce or digital. It works because people trust that it will retain a recognisable value, settle obligations and be accepted by others.
Tokenisation could make the financial system faster and more flexible. It could allow money and assets to interact through software, compress processes that currently take days and open markets to new forms of participation.
But the technology’s greatest potential may come from preserving the best features of the existing system while replacing some of its slowest machinery.
The next era of digital finance is therefore unlikely to be a simple contest between banks and crypto. It may be a convergence: programmable technology connected to regulated institutions, private innovation anchored by public money, and new financial products built on old principles of trust.
For wealth builders, the opportunity is not to chase every new token. It is to understand who is constructing the rails, who controls the gateways and which businesses become more productive when money itself can move with intelligence.
Sources
- Bank for International Settlements: Anchoring trust in money—innovation beyond stablecoins
- Bank for International Settlements: The impact of stablecoins on the international monetary and financial system
- Bank for International Settlements: Project Agorá—exploring tokenisation of wholesale cross-border payments
- Bank for International Settlements: Stablecoins—framing the debate
