Bank for International Settlements and Federal Reserve Bank of New York publish Project Pine research on smart contract tools for tokenised monetary policy operations

The Federal Reserve Bank of New York and the Bank for International Settlements (BIS) published a joint research study under Project Pine examining whether and how central banks could implement monetary policy operations in a hypothetical future where tokenisation is widely used for wholesale payments and securities settlement. The work produced a prototype “tokenised toolkit” that uses programmable smart contracts to support policy implementation in both standard and emergency market operations. Designed with input from central banks’ financial markets advisors across multiple jurisdictions, the prototype is intended to be technically modifiable across different monetary policy frameworks and is not specific to any currency or jurisdiction. It is built to support common central bank functions including paying interest on reserves, conducting open market operations and managing collateral, and was tested against ten hypothetical scenarios spanning normal market dynamics and stress events using historical data inputs. Testing indicated the prototype could execute the intended operations instantly across the scenarios, while highlighting interoperability and data standardisation as areas for further research. The release stresses that the project is experimental and should not be interpreted as reflecting policy directives or views of the Federal Reserve Bank of New York or the Federal Reserve System.