Bank for International Settlements: Traditional Financial Institutions Face Risks in Transitioning to Tokenization

ChainCatcher news, according to TheBlock, the Bank for International Settlements report emphasizes that major financial institutions are trialing tokenized deposits to improve settlement efficiency and programmability. However, the transition from traditional finance to tokenization may pose risks, including potential governance and legal framework issues, as well as credit, liquidity, custody, and operational risks. These challenges may differ from those faced by traditional market infrastructure, thus requiring a comprehensive assessment by central banks.

Of course, tokenization also has many benefits, including reduced transaction costs and faster transaction speeds. Governance, legal, and liquidity risks are the key concerns of central banks regarding tokenized assets.