Central banks are increasingly exploring how to make their reserves available to selected banks using distributed ledger technology, referred to as tokenized reserves. In a recent report, the International Monetary Fund (IMF) covers policy objectives for tokenized reserves, operating models and roles of central banks, implications for monetary policy implementation, alternative solutions, and implementation strategies. Ultimately, central banks’ strategic decisions and policy options will vary across jurisdictions, reflecting differences in available resources, legal systems, and policy priorities.
Key messages are:
- Central banks explore tokenized reserves as a way to preserve the safety, liquidity, and policy role of central bank money within tokenized ecosystems by enabling risk-free settlement and support for more efficient, automated, and resilient wholesale payment systems.
- To ensure policy effectiveness, central banks must align their approach to implementing tokenized reserves with their policy objectives. This involves selecting ledger designs, governance structures, and stakeholder engagement that reflect the desired levels of control, risk tolerance, and authority over issuance, access, data, and system continuity.
- Although tokenization may not fundamentally affect central banks’ ability to implement monetary policy, it could introduce enhancements such as programmable or automated liquidity management, which may require updates to governance, legal frameworks, and risk management.
- Alternative solutions to tokenized reserves exist—such as real-time gross settlement (RTGS) links, omnibus accounts, and privately issued tokenized money. Each offers varying degrees of risk, cost, control, programmability, and alignment with policy objectives.
- As central banks explore the potential of tokenized reserves, they may adopt varying strategic approaches—guided by policy goals, market readiness, and institutional capacity, and supported by research, testing, and legal preparation