The Tokenization of Money: What it Means for the International Monetary System

Hung Q. Tran

No 2455, Policy briefs on Economic Trends and Policies from Policy Center for the New South

Abstract: Amidst intense geopolitical competition, efforts to develop tokenized monetary units—tradable on programmable platforms such as blockchains—have added a new dimension to the debate about the role of a global payment and reserve currency. Tokenized monetary units are expected to greatly improve the efficiency of payment transactions in terms of their speed and cost, especially cross-border transactions. They could also meet emerging demand for technologically enabled features such as smart contracts, which can be embedded in monetary tokens. The country that can promote and develop tokenization based on its fiat money—the United States, for example—would enjoy first-mover advantages, being able to attract users to its tokenized platforms, and helping to strengthen the role of its currency in global payments and finance in the digital age. Alternatively, if several major countries could compete by developing tokenized money, the shift to a multi-currency reserve system would be accelerated.

Date: 2025-09
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Persistent link: https://EconPapers.repec.org/RePEc:ocp:pbecon:p44_25

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