The International Monetary Fund published a formal assessment on July 2 concluding that tokenization represents a structural transformation of the financial system rather than a technical efficiency upgrade, and that policy decisions made in the near term will determine whether the shift produces a more stable or more fragmented global market.
Tobias Adrian, the IMF's financial counselor and director of its Monetary and Capital Markets Department, wrote in the blog that moving financial assets and liabilities onto shared digital ledgers changes where risk sits, not only how fast transactions complete.
"When financial assets and liabilities move onto shared digital ledgers, the structure of the financial system itself changes," Adrian wrote. "Risk could migrate away from the balance sheets of institutions such as banks and investment funds towards the companies managing services and market infrastructures."
Traditional financial markets are built around sequential steps: execution, clearing, and settlement each happen separately and with deliberate delays. Those delays allow time for error correction, stress responses, and liquidity management. Smart contracts on shared ledgers collapse those steps into simultaneous actions, which removes friction but also removes the buffers that regulators have historically relied upon during periods of strain.
Adrian said the consequence is structural:
"Frictions disappear, but so do buffers. Liquidity demands materialize in real time, collateral calls can be automated, and failures can propagate faster than institutions or supervisors can respond."
Tokenization could shift risk away from banks’ balance sheets towards platforms and code. That changes where vulnerabilities emerge, so policies must adapt. See what this means in our new blog: https://t.co/niSfVsSwgf pic.twitter.com/rH6ogTWl33
— IMF (@IMFNews) July 2, 2026
What replaces the central bank reserve in a tokenized system
The IMF's assessment focused particular attention on the settlement asset question, which it described as the foundational design choice for any tokenized financial system. Every financial system depends on a core settlement asset, and central bank money has historically filled that role. Tokenization creates pressure to answer the question again.
The report identified three forms of digital money that could serve as settlement assets. Tokenized bank deposits are digital representations of existing commercial bank liabilities and inherit the regulatory framework that surrounds them. Stablecoins offer programmability and cross-border reach but carry convertibility risk dependent on reserve quality and issuer resilience. The IMF noted that even fully backed stablecoins have been vulnerable under market stress. Tokenized central bank reserves eliminate credit risk in the settlement asset but require central banks to operate or closely govern programmable infrastructures, extending their operational role beyond traditional payment systems.
The design choice between those three forms carries large downstream consequences. If privately issued global stablecoins become dominant, emerging and developing economies face heightened exposure to currency substitution and rapid capital flight, because tokenized assets can cross borders almost instantaneously without the friction that currently slows capital flows and gives policymakers reaction time.
What the shift means for banks, and where risk concentrates
The IMF said banks would not disappear in a tokenized financial system. Their functions would change. Tokenized deposits unify payments, client settlement, and treasury operations on shared ledgers. On the lending side, smart contracts can embed interest accrual and collateral triggers, which enables continuous risk monitoring. The IMF framed that dual change as a compression of processes that previously required separate institutional steps.
Capital markets face a similar shift. Tokenized securities compress issuance, trading, settlement, custody, and compliance into integrated workflows. That compression reduces counterparty risk in normal conditions and accelerates stress in periods of market strain, because automated redemptions and margining remove the discretionary pauses that allow human intervention.
The report identified collateralized markets as among the earliest likely beneficiaries of tokenization, where high-quality assets can be mobilized quickly. The same infrastructure concentration that makes those benefits possible also concentrates systemic risk:
"When infrastructure becomes the central hub, governance failures become systemic events," Adrian wrote.
The IMF's publication coincides with active institutional preparation for exactly this infrastructure shift. The Clearing House, whose owners include JPMorgan Chase, Bank of America, and Barclays, reportedly plans to launch a tokenized deposit network in early 2027. Securitize tokenized its own NYSE-listed shares on Solana and Avalanche on the day it began public trading. Ondo Finance brought BlackRock's IVV ETF and Micron shares onto Ethereum through a custody model that keeps underlying securities inside regulated US infrastructure.
Real-world assets on blockchain rails have already reached $26 billion, according to DeFiLlama data. Excluding stablecoins, the largest portions are in tokenized gold and money market funds.
Legal foundations and oversight of code itself
The IMF's policy analysis extended to a dimension that regulators have not yet fully addressed: the oversight of smart contracts as systemic infrastructure. As financial logic moves into code, the rules governing transactions are automated and the institutions executing them are no longer the primary unit of supervision.
"Effective oversight must therefore extend beyond institutions to the code itself. Critical smart contracts could become too important to fail, requiring increased oversight and supervision, much as systemically important financial institutions do today," Adrian wrote.
Legal clarity is a prerequisite for that oversight to function. Market participants must know whether tokenized records constitute definitive proof of ownership, whether settlement finality carries legal recognition, and which jurisdiction's law applies to cross-border transactions. Without that clarity, Adrian said tokenization would remain fragmented rather than becoming a coherent improvement to settlement infrastructure.
The US Securities and Exchange Commission has been weighing an innovation exemption that would let market participants test blockchain-based trading platforms for tokenized securities while a longer-term regulatory framework is developed. Reports cited by crypto.news indicated the agency later delayed the proposal after exchanges raised questions about shareholder rights and ownership verification.
The IMF called for international coordination to match the cross-border speed of tokenized assets.
"Strong domestic policy frameworks remain the first line of defense. But international coordination is essential if tokenization is to support, rather than undermine, inclusion and stability," Adrian wrote.
Roman Zaika
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