Tokenized Book Money. Programmable? Sure, but safe!
The german version of this paper was first published in AJP 4/2024, 293
17 Pages Posted: 20 May 2024 Last revised: 28 May 2024
Date Written: April 24, 2024
Abstract
The tokenization of book money aims to combine the asset and cash legs of transactions on a shared infrastructure. It reduces settlement and counterparty risks. At the same time, the tokenization of money allows it to be programmed. Book money can be tokenized by creating stablecoins and using an account solution that tokenizes deposits. From a legal point of view, the two forms are very different: Stablecoins represent value-based money and can generally be transferred from peer to peer. Tokenized deposits, on the other hand, represent a claim of the account holder against the account-holding institution and are account-based money. The merging of the asset and cash legs is achieved by settling the transaction at the level of the account-holding institutions at the same time as the tokens are transferred to the customer.
Keywords: tokenized deposit; stablecoins; programmable money
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