Combine CBDCs, tokenized deposits on a unified ledger, BIS says

The central bank for central banks is bullish on tokenization of deposits, following JPMorgan showing interest in the concept in February


dRender/Shutterstock modified by Blockworks


The Bank for International Settlements (BIS) put out a report Tuesday arguing that commercial banks tokenizing their customers’ deposits could revolutionize the global financial system. 

But for that to happen, BIS said that DeFi projects need to realize that actively walling themselves off from the rest of the financial system (i.e. central banks and commercial banks) isn’t a good strategy.

“Not only is crypto self-referential, with little contact with the real world, it also lacks the anchor of the trust in money provided by the central bank,” BIS wrote in the report. “While stablecoins have mushroomed to fill this vacuum by mimicking central bank money, the implosion of the crypto universe in the past year shows that there is no substitute for the real thing.”

“Central bank money and the settlement finality that it brings is a much firmer foundation for tokenization,” the report continued.

BIS mentioned efforts by commercial banks and private sector groups that are exploring use cases for tokenization. 

JPMorgan, the biggest bank in the world by assets, is one example. Like BIS, JPMorgan feels stablecoins aren’t regulated enough and bank-issued deposit tokens would be a much better alternative to move value across blockchains. 

BIS also hyped up financial infrastructure it called a “unified ledger,” with ledgers being one of the most important concepts in crypto

A unified ledger, BIS said in a press release, “would combine tokenized forms of central bank digital currency (CBDC) with tokenized bank deposits and other tokenized claims, opening up a new era in the joint development of the monetary system and the economy.”

An insider at the International Monetary Fund (IMF) echoed a similar sentiment at CBDC roundtable discussion this week, saying that a trusted ledger would go a long way in protecting people’s property rights around the world.

Later on in the report, BIS clarified by saying that unified ledgers won’t mean “one ledger to rule them all.” Rather, it appears to mimic the network of networks concept of existent distributed ledgers.

“Depending on the needs of each jurisdiction, multiple ledgers, each with a specific use case, could coexist. APIs could connect these ledgers to each other and existing systems. Over time, they could incorporate new functions or merge as overlaps in scope expand,” BIS wrote in the report. 

The BIS seems to have softened its view on digital assets a bit since January when it floated a crypto ban as a possibility. Although the bank didn’t pull any punches on crypto in the report, referencing 2022’s collapse twice, it acknowledged the validity of cryptographic techniques.

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