Deposit Tokenization: Survey of Overseas Initiatives
August 30, 2024
SUGIMURA Kazutoshi, BESSHO Masaki*
Payment and Settlement Systems Department
*Currently at the Kobe Branch
Recently, initiatives related to "deposit tokenization" have begun to expand globally. With the emergence of stablecoins, these initiatives seem to seek an extension of functionality in payment and settlement systems by applying new technologies, such as distributed ledger technology (DLT), to bank deposits as a traditional means of payment. The main reason such initiatives prefer leveraging deposit money is said to be its affinity with the two-tier monetary system and possibly with existing laws or regulations. However, there remain some issues that require further clarification on how payments with tokenized deposits are categorized in the private law system, and how smart contracts provide implications for non-functional requirements and legal certainty. Multifaceted discussions on deposit tokenization will therefore continue to be necessary, with an eye toward future payment and settlement systems.
Notice
The Bank of Japan Review Series is published by the Bank to explain recent economic and financial topics for a wide range of readers. This report, 2024-E-9, is a translation of the Japanese original, 2024-J-10, published in June 2024. Views expressed are those of the authors and do not necessarily reflect those of the Bank.
If you have any comments or questions, please contact FinTech Center, Payment and Settlement Systems Department (E-mail: post.fintech@boj.or.jp).