The Federal Reserve Bank of New York and the Bank for International Settlements (BIS) published joint research under Project Pine examining whether and how central banks could continue to implement monetary policy operations in a hypothetical future where wholesale payments and securities settlement are widely tokenised. The study finds that programmable smart contracts could allow central banks to customise and deploy policy implementation tools in such tokenised markets. Project Pine, conducted by the New York Innovation Center and the Swiss Centre of the BIS Innovation Hub, produced a prototype “tokenised toolkit” designed to be technically modifiable for different monetary policy frameworks and usable for standard or emergency market operations. Developed with input from central bank financial markets advisers across multiple jurisdictions, the prototype is not tied to any currency or jurisdiction and was designed to support core functions including paying interest on reserves, open market operations and collateral management. The toolkit was tested against ten hypothetical scenarios based on historical market-event data, including tightening and easing cycles, quantitative easing and tightening, and periods of strained liquidity or broader market disruptions, and it executed the intended operations instantaneously; the work also flagged interoperability and data standardisation as areas for further research. The release stresses that the project is experimental research and should not be interpreted as reflecting policy directives or views of the Federal Reserve Bank of New York or the Federal Reserve System, and positions the prototype as a basis for potential further research and development by central banks.

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