The World Federation of Exchanges has published a policy paper arguing that central bank digital currencies (CBDCs) could accelerate the development of tokenised markets by providing a digital form of central bank money that can be used for settlement and avoids the credit and liquidity risks associated with commercial bank money or alternatives such as stablecoins. The paper links CBDC-based settlement to broader participation in tokenised trading and the potential benefits of tokenisation, including fractional ownership, greater access for smaller investors, and improved transparency and security. It sets out three areas that would need to be addressed for CBDCs to be traded and used efficiently: significant industry investment to modernise legacy systems to achieve appropriate settlement speeds, legislative changes to recognise CBDCs as settlement assets and enable final and irreversible settlement in default scenarios, and cross-border coordination to manage oversight challenges and legal frictions arising from differing national frameworks and limited regulatory harmonisation.

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