The International Monetary Fund has published an analysis describing tokenization as a structural shift in financial architecture that moves execution, settlement and risk management toward shared ledgers and programmable code. Atomic settlement, continuous liquidity management and embedded compliance could reduce counterparty and operational risks, but greater speed, automation and infrastructure concentration could accelerate liquidity stress, procyclical margin calls and cross-border contagion while limiting authorities’ time to intervene. The note proposes a five-pillar policy roadmap covering settlement in safe money, application of global crypto standards under the principle of same activity, same risk and same regulatory outcome, legal certainty, interoperability and international coordination, and adaptation of liquidity and crisis management frameworks for continuous operations. It also calls for regulatory oversight of code and infrastructure, including mandatory independent audits and formal verification for systemically important smart contracts, predefined intervention mechanisms, real-time supervisory tools and central bank backstops capable of operating within tokenized systems. Emerging and developing economies may face heightened risks from volatile capital flows, currency substitution and erosion of monetary sovereignty, particularly where global stablecoins gain traction.

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