The International Monetary Fund published a Fintech Note setting out an analytical framework for central banks assessing whether and how to make reserves available on distributed ledger technology as “tokenized reserves” for a predefined group of institutions. The note synthesizes policy objectives, implementation and governance models, monetary policy considerations, and alternative settlement approaches for tokenized asset markets, without endorsing any single solution. Tokenized reserves are framed as existing central bank reserves issued on DLT to preserve the safety and settlement role of central bank money in tokenized ecosystems and potentially enable more automated wholesale payments, including atomic delivery-versus-payment when cash and assets share a ledger. The note distinguishes single-ledger and compatible-ledger architectures and maps four operating models for a single ledger (central bank operated integration, jointly operated distribution, third-party operated separation, and permissionless), highlighting trade-offs around programmability, control, operational resilience, data privacy, and financial stability. It also identifies functions central banks should retain control over across models, including issuance and redemption, access and eligibility (including the ability to freeze or suspend), data visibility, the ability to halt settlement in emergencies, and continuity of settlement services. For monetary policy, tokenization is presented as unlikely to undermine core implementation capacity, but coexistence of tokenized and traditional reserves could fragment liquidity unless the two forms are interoperable and economically equivalent, with the note citing intraday-only tokenized reserve arrangements with end-of-day conversion as one possible transitional safeguard. Alternative solutions covered include RTGS links, omnibus accounts, and privately issued tokenized money (tokenized deposits, deposit tokens, and fiat-backed stablecoins). The comparison focuses on delivery-versus-payment capability, strict atomic settlement, and whether settlement occurs in central bank money, with single-ledger tokenized reserves presented as the only option combining strict atomicity with central bank money settlement. The note also proposes a feasibility-versus-suitability prioritisation framework and four strategic postures for central banks (inaction, wait and see, enablement, and catalyst), and points to sequencing approaches such as the European Central Bank’s plan to implement an RTGS link first with tokenized reserves as a possible later step if markets evolve.
International Monetary Fund 2025-11-19
International Monetary Fund outlines implementation and policy choices for central banks exploring tokenized reserves
The International Monetary Fund released a Fintech Note with a framework for central banks to evaluate issuing tokenized reserves on DLT for specific institutions. It discusses policy objectives, governance models, and monetary policy considerations, highlighting four operating models for single-ledger architectures and their trade-offs. It also examines alternatives like RTGS links and privately issued tokenized money, emphasizing interoperability and economic equivalence between tokenized and traditional reserves.