Benefits
The ways tokenisation can improve on today's processes, each explained once. Some apply to almost every use case, others to only a few; many depend on others joining the same networks. Each use case page shows which apply there and how well they are evidenced.
Speed
Around-the-clock operation common to most use cases[1][2][3]
Assets and money can move at any hour, including evenings and weekends, instead of only during business hours.
Traditional settlement and payment systems close overnight and at weekends, so value cannot move when markets are stressed outside those hours. A tokenised ledger can run continuously, which lets firms meet margin calls or move cash across time zones when they need to. The full benefit needs the cash side to be available too, which is why central banks are working to extend their own settlement hours. Running non-stop also places new demands on operations, staffing and liquidity.
Needs cash on the ledgerNeeds counterparties on the ledger
Applies to: Asset servicing (evidenced), Card settlement (evidenced), CCP margin (theory · high confidence), Collateral mobility (theory · low confidence), Cross-border payments (evidenced), Fund subscription and redemption (evidenced), FX settlement (evidenced), Intraday repo (theory · low confidence), Merchant payments (theory · low confidence), Payments (evidenced), Payouts (theory · high confidence), Programmable payments (evidenced), Repo (theory · low confidence), Secondary trading (evidenced), Term repo (theory · low confidence), Treasury management (evidenced)
Faster cross-border payments specific to some[4][5]
Payments across currencies and borders settle in seconds through one shared process instead of a chain of correspondent banks.
A cross-border payment today hops between correspondent banks, each checking and updating its own records, which adds days, cost and failures. Putting tokenised reserves and deposits on one platform lets the payment and its compliance checks happen in a single step. In BIS-led testing, payments settled in about 80 seconds on average. This needs many banks and central banks on the same or connected platforms, which is a large coordination task.
Needs counterparties on the ledgerNeeds cash on the ledgerNeeds connected ledgers
Applies to: Cross-border payments (evidenced), Payouts (theory · high confidence), Treasury management (evidenced)
Faster settlement common to most use cases[6][5]
Trades and payments settle in minutes or seconds instead of one or more days.
Today a securities trade usually settles a day or more after it is agreed, because instructions pass through brokers, custodians and settlement systems in batches. When the asset and the payment sit on the same ledger, ownership can change as soon as both sides agree, cutting the gap to minutes or seconds. A shorter gap means less money tied up waiting and less time for things to go wrong. The gain only appears when both sides and the cash are on the ledger; most tokenised assets today still settle through traditional post-trade systems.
Needs counterparties on the ledgerNeeds cash on the ledger
Applies to: Asset servicing (theory · high confidence), Card settlement (theory · high confidence), Delivery versus payment (DvP) (theory · high confidence), Fund subscription and redemption (evidenced), FX settlement (evidenced), Merchant payments (theory · low confidence), Payments (theory · high confidence), Primary issuance (evidenced), Secondary trading (theory · high confidence)
Faster issuance specific to some[6][7]
Issuers can bring new bonds and fund units to market faster and more often, with less manual setup.
Bond issuance today is often bespoke and manual, with documents, agents and settlement arrangements set up for each deal. Platforms that issue directly on a ledger can automate much of the workflow and create tokens at the moment of distribution, which suits frequent, repeat issuers such as commercial paper and note programmes. This can cut time and cost per issue and allow features tailored to investors. The benefit depends on investors and custodians being able to hold the new form of security.
Works aloneNeeds smart contracts
Applies to: Primary issuance (evidenced)
Risk
Atomic settlement (DvP and PvP) common to most use cases[8][5][9]
The asset and the payment move together in one step, or not at all, so neither side can be left unpaid.
In today's markets the asset and the cash often move on different systems, so one leg can complete while the other fails. On a shared ledger both legs can be bundled into a single transaction that either fully happens or does not happen at all (delivery versus payment for securities, payment versus payment for currencies). This removes principal risk between the two sides. The trade-off is that each side usually has to hold the asset or cash up front, which reduces the netting banks rely on today.
Needs counterparties on the ledgerNeeds cash on the ledgerNeeds smart contracts
Applies to: Cross-border payments (theory · high confidence), Delivery versus delivery (DvD) (evidenced), Delivery versus payment (DvP) (evidenced), FX settlement (theory · high confidence), Intraday repo (evidenced), Primary issuance (evidenced), Repo (evidenced), Secondary trading (theory · high confidence), Securities lending (evidenced), Term repo (evidenced)
Less counterparty and settlement risk common to most use cases[5][6][2]
Shorter, simultaneous settlement leaves less time and room for a trade to fail or a counterparty to default.
The longer a trade takes to settle, the longer each side is exposed to the other failing to deliver or going bust. Settling quickly, and on the same ledger, shortens that exposure and removes the gap between the two legs. Settling in central bank money or a safe settlement asset also avoids adding new credit risk. Using private settlement tokens of uneven quality can bring some of that risk back.
Needs counterparties on the ledgerNeeds cash on the ledger
Applies to: Card settlement (theory · low confidence), CCP margin (theory · high confidence), Collateral mobility (theory · high confidence), Delivery versus delivery (DvD) (theory · high confidence), Delivery versus payment (DvP) (theory · high confidence), FX settlement (theory · high confidence), Intraday repo (theory · high confidence), Merchant payments (theory · high confidence), Primary issuance (theory · high confidence), Programmable payments (theory · high confidence), Repo (theory · high confidence), Securities lending (theory · low confidence), Term repo (theory · high confidence)
Liquidity and capital
Capital and liquidity efficiency specific to some[9][5][7]
Firms can hold smaller safety buffers of cash and collateral, freeing balance sheet for other uses.
Because settlement today is slow and uncertain, firms hold extra cash, reserves and collateral as a cushion. Faster settlement, collateral that moves on demand and intraday funding can let firms run with smaller cushions. Central bank staff see this as a possible reduction in reserve demand, though no change is visible yet. Regulatory and accounting treatment of tokenised assets must also recognise the lower risk before capital charges fall.
Needs counterparties on the ledgerNeeds cash on the ledgerNeeds regulatory change
Applies to: Card settlement (theory · low confidence), CCP margin (theory · low confidence), Collateral mobility (theory · high confidence), Cross-border payments (evidenced), Delivery versus delivery (DvD) (theory · low confidence), Delivery versus payment (DvP) (theory · low confidence), Intraday repo (theory · low confidence), Payouts (evidenced), Repo (theory · low confidence), Securities lending (theory · low confidence), Term repo (theory · low confidence), Treasury management (theory · high confidence)
Collateral mobility specific to some[5][10][3]
Collateral can be moved to where it is needed in minutes, rather than being stuck at one custodian until the next settlement cycle.
Collateral today often sits in separate accounts at different custodians and moves only within settlement windows, so firms keep extra on hand everywhere in case of a margin call. Tokenised collateral can be transferred on a shared ledger at the same moment as payment, with eligibility checked automatically. This makes it easier to meet margin calls quickly and lets a wider pool of assets, such as fund shares, serve as collateral. It works only if the receiving party accepts the token and both sides are on connected ledgers.
Needs counterparties on the ledgerNeeds connected ledgers
Applies to: CCP margin (evidenced), Collateral mobility (evidenced), Delivery versus delivery (DvD) (evidenced), Fund subscription and redemption (evidenced), Intraday repo (evidenced), Repo (evidenced), Securities lending (evidenced), Term repo (evidenced)
Composability specific to some[8][3][1]
A tokenised asset can be reused across many applications, for example a fund share also serving as collateral or payment.
Today an asset held at one custodian usually works only within that institution's systems. Tokens built to common standards can be plugged into other applications on the same or linked ledgers, so one asset can be held, pledged, lent or swapped without being moved off-platform. Tokenised money market fund shares are already used as margin and swapped for stablecoins. This depends on shared standards and links between ledgers; otherwise liquidity splits into isolated pools.
Needs cross-asset liquidityNeeds connected ledgersNeeds smart contracts
Applies to: CCP margin (theory · high confidence), Collateral mobility (evidenced), Delivery versus delivery (DvD) (theory · low confidence), Fund subscription and redemption (evidenced), Secondary trading (evidenced)
Better intraday liquidity specific to some[9][5]
Firms can borrow and lend cash for hours, not just overnight, and so hold less idle cash during the day.
Banks keep large cash buffers because payments come in and go out at different times of day and overnight funding is the shortest normal loan. With instant settlement, a repo or loan can start and end at a set time within the day, so a firm can borrow just for the hours it needs. Central bank officials note this could reduce banks' need for reserves for payments, though instant settlement can also mean less netting. The market for this is still small and mostly used within groups or among a few banks.
Needs counterparties on the ledgerNeeds cash on the ledger
Applies to: FX settlement (theory · low confidence), Intraday repo (evidenced), Repo (evidenced), Treasury management (theory · low confidence)
Cost
Fewer intermediaries common to most use cases[5][6][1]
Shorter chains of banks, agents and custodians between issuer and investor, so fewer fees and handoffs.
A bond or cross-border payment today can pass through a long chain of agents, custodians and correspondent banks, each updating its own account in turn. A shared ledger can replace that chain with a single integrated step, which cuts handoffs, delays and fees. Roles that are mainly operational are most at risk of being cut; roles such as underwriting and distribution remain. New roles, such as ledger operators and token custodians, also appear.
Needs counterparties on the ledger
Applies to: Cross-border payments (evidenced), Delivery versus payment (DvP) (theory · low confidence), Payments (theory · high confidence), Payouts (evidenced), Primary issuance (theory · high confidence), Secondary trading (theory · low confidence)
Fewer reconciliations common to most use cases[5][8][6]
Everyone works from the same record, so firms spend less time checking that their books agree.
Today each bank, custodian and investor keeps its own records and sends messages to the others, then teams reconcile the differences, a source of delay, cost and errors. On a shared ledger the messaging, record-keeping and transfer happen in one place, giving participants one agreed version of who owns what. That reduces manual checks and breaks. The gain shrinks if firms must still keep and match parallel records in legacy systems.
Needs counterparties on the ledger
Applies to: Asset servicing (theory · high confidence), Card settlement (theory · low confidence), Delivery versus payment (DvP) (theory · high confidence), Fund subscription and redemption (theory · high confidence), Payments (theory · high confidence), Repo (theory · high confidence), Securities lending (evidenced), Term repo (theory · high confidence)
Lower operating cost common to most use cases[7][6][11]
Less manual processing, fewer systems and fewer middlemen lower the cost of issuing, holding and settling assets.
Much of the cost in today's markets comes from back-office work: matching records, chasing failed trades, servicing assets and paying intermediaries. Tokenisation can cut these costs by combining steps and automating them. Industry studies estimate large savings, but these are mostly projections and often from firms with a commercial interest. Authorities note that overall savings appear only at scale, and that building and running new systems has its own cost.
Needs counterparties on the ledger
Applies to: Asset servicing (theory · low confidence), Cross-border payments (theory · low confidence), Merchant payments (theory · low confidence), Payouts (theory · low confidence), Programmable payments (theory · low confidence), Repo (theory · low confidence)
Programmable workflows common to most use cases[8][1][2]
Rules such as coupon payments, margin calls and eligibility checks run automatically in the asset itself.
Today many lifecycle tasks, such as paying coupons, processing corporate actions, calling margin or checking who may hold an asset, are handled by separate teams and systems using manual checks. Smart contracts let these rules be written into the token or the platform so they run when set conditions are met. This reduces manual work and errors and lets steps be chained together. The code itself becomes a new risk to govern, and legal enforceability of automated actions is still being tested.
Needs smart contracts
Applies to: Asset servicing (evidenced), Card settlement (evidenced), CCP margin (theory · low confidence), Collateral mobility (theory · high confidence), Cross-border payments (evidenced), Fund subscription and redemption (evidenced), Merchant payments (theory · low confidence), Payments (evidenced), Primary issuance (theory · high confidence), Programmable payments (evidenced), Term repo (theory · low confidence), Treasury management (evidenced)
New markets
New markets and products specific to some[8][10][5]
Tokenisation makes some activities practical for the first time, such as repo by the hour or payments that trigger on delivery.
Some transactions are too slow, costly or risky to run on today's infrastructure, so they are not offered. With instant, programmable settlement, new products become possible: intraday repos for set hours, payments released automatically when goods arrive, or contracts that adjust to real-time data. Authorities see this as one of tokenisation's distinctive promises, but most such products are still small or experimental.
Needs counterparties on the ledgerNeeds cash on the ledgerNeeds smart contracts
Applies to: FX settlement (theory · low confidence), Intraday repo (evidenced), Merchant payments (theory · low confidence), Payouts (theory · low confidence), Programmable payments (theory · high confidence)
Compliance and transparency
Real-time transparency and audit trail common to most use cases[6][4][12]
Participants and supervisors can see positions and transaction history as they happen, not after the fact.
In today's systems, participants often see only their part of a transaction and its status is hard to trace across intermediaries. A shared ledger keeps one tamper-resistant history of ownership and transfers, and can show each party where a payment or trade stands. This can simplify audit and supervision. Privacy rules limit who may see what, so visibility is usually selective rather than total.
Needs counterparties on the ledger
Applies to: Asset servicing (theory · high confidence), Cross-border payments (theory · high confidence), Securities lending (theory · low confidence), Treasury management (theory · high confidence)
Access and distribution
Wider distribution and smaller ticket sizes specific to some[6][13][12]
Assets can be split into smaller units and offered to more investors, in more places, through digital channels.
Many bonds and funds have high minimum investments and reach investors only through a limited set of distributors. Tokens can be divided into smaller units and distributed through digital wallets and platforms, sometimes across several ledgers. This can widen the investor base and make smaller issues viable. Investor-protection rules still apply, and in practice many tokenised products remain restricted to approved professional investors.
Needs regulatory change
Applies to: Fund subscription and redemption (theory · high confidence), Primary issuance (theory · low confidence), Secondary trading (evidenced)
Sources
- [1]Modernising money and markets (speech by Sarah Breeden) — Bank of England, 19 May 2026. Accessed 12 Oct 2026.A
- [2]The transformation of money: technological disruption and the future of financial services (speech by Piero Cipollone) — European Central Bank, 8 Dec 2025. Accessed 12 Oct 2026.A
- [3]The Emergence of Tokenized Investment Funds and Their Use Cases — Federal Reserve Bank of New York (Liberty Street Economics), 24 Sep 2025. Accessed 12 Oct 2026.A
- [4]Project Agorá — BIS Innovation Hub, May 2026. Accessed 12 Oct 2026.A
- [5]Annual Economic Report 2025, Chapter III: The next-generation monetary and financial system — Bank for International Settlements, 29 Jun 2025. Accessed 12 Oct 2026.A
- [6]Guardian Fixed Income Framework v1.1 — Project Guardian Fixed Income Industry Group (MAS), Nov 2025. Accessed 12 Oct 2026.B
- [7]Approaching the Tokenization Tipping Point — Ripple and Boston Consulting Group, 7 Apr 2025. Accessed 12 Oct 2026. Industry-funded study co-authored by Ripple, a tokenisation vendor; savings figures are projections.C
- [8]Annual Economic Report 2023, Chapter III: Blueprint for the future monetary system: improving the old, enabling the new — Bank for International Settlements, 25 Jun 2023. Accessed 12 Oct 2026.A
- [9]Repo Market Structure and Monetary Policy Implementation (remarks by Roberto Perli) — Federal Reserve Bank of New York, 9 Jul 2026. Accessed 12 Oct 2026.A
- [10]Building tomorrow's markets: the digitalisation of finance (speech by Sasha Mills) — Bank of England, 2 Jul 2025. Accessed 12 Oct 2026.A
- [11]Tokenisation in the context of money and other assets: concepts and implications for central banks — BIS Committee on Payments and Market Infrastructures, 21 Oct 2024. Accessed 12 Oct 2026.A
- [12]The Financial Stability Implications of Tokenisation — Financial Stability Board, 22 Oct 2024. Accessed 12 Oct 2026.A
- [13]Operationalising Tokenised Funds — Project Guardian Asset and Wealth Management Industry Group (MAS), Nov 2025. Accessed 12 Oct 2026.B