Deposit Tokenization: Survey of Overseas Initiatives

Kazutoshi Sugimura and Masaki Bessho
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Kazutoshi Sugimura: Bank of Japan
Masaki Bessho: Bank of Japan

No 24-E-9, Bank of Japan Review Series from Bank of Japan

Abstract: Recently, initiatives related to "deposit tokenization" have begun to expand globally. With the emergence of stablecoins, these initiatives seem to seek an extension of functionality in payment and settlement systems by applying new technologies, such as distributed ledger technology (DLT), to bank deposits as a traditional means of payment. The main reason such initiatives prefer leveraging deposit money is said to be its affinity with the two-tier monetary system and possibly with existing laws or regulations. However, there remain some issues that require further clarification on how payments with tokenized deposits are categorized in the private law system, and how smart contracts provide implications for non-functional requirements and legal certainty. Multifaceted discussions on deposit tokenization will therefore continue to be necessary, with an eye toward future payment and settlement systems.

Date: 2024-08-30
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