According to the Bank of France, central bank digital currencies (CBDCs) should be designed with asset tokenization in mind, as a failure to do so could lead users to turn to stablecoins.
Denis Beau, Deputy Governor of the Bank of France, emphasized in a speech at a conference that if central bank money is not adapted for tokenized transactions, market participants may prefer alternative assets for settlements, such as stablecoins. Despite tokenized assets currently representing a small portion of overall financial assets, Beau anticipates significant changes in this regard.
Beau highlighted tokenization as the future of the financial system, emphasizing the potential of distributed ledger technology for optimizing and tracking transactions, especially in post-trade processes. However, he underscored that this potential can be realized only with active support from central banks and lawmakers.
Globally, asset tokenization is becoming increasingly important, with the Federal Reserve of the United States estimating the unlocking of $1.5 trillion by 2030 through the tokenization of real assets. Blockchain-based tokenization simplifies asset trading, making it easy, fast, and frictionless, while also opening new possibilities like fractional ownership of assets.
For successful tokenization, Beau stressed that regulatory frameworks need to be proactive rather than reactive. He called on regulators to create trust structures to encourage innovative projects, highlighting the need for an active regulatory approach rather than reactive responses to crises.
Beau also highlighted the potential of CBDCs in facilitating international payments and urged other central banks to prioritize cross-border transfers from the outset, rather than treating them as an afterthought. He emphasized the importance of proactive regulation and cited examples of cases where reactive regulations received criticism in various regions, such as the United States and Hong Kong.
In conclusion, the Bank of France sees asset tokenization as a key aspect of the future financial landscape, and CBDCs must be designed with this in mind to prevent stablecoins from dominating the market. Beau emphasized the need for proactive regulatory structures for the successful implementation of tokenization and CBDCs.