The Evolution of Financial Market Infrastructure: From Digitalization to Tokenization

Dong Guo and Peng Zhou

No E2023/5, Cardiff Economics Working Papers from Cardiff University, Cardiff Business School, Economics Section

Abstract: This paper examines the historical development and cross sectional heterogeneities of Financial Market Infrastructure (FMI). From an evolutionary perspective, we review and compare FMIs in the US, Europe, and China. We identify an emerging trend in which the development of FMI is transitioning from digitalization to tokenization with the rise of Distributed Ledger Technology (DLT). Digitalization reinforces centralization, while tokenization promotes decentralization, posing complex challenges to regulatory framework which is also part of FMI. We then specifically analyze DLT based FMI in the bond market, evaluate different models of tokenization, and propose a heterogeneous consortium blockchain solution.

Keywords: digitalization; tokenization; blockchain; bond (search for similar items in EconPapers)
Pages: 12 pages
Date: 2023-03
New Economics Papers: this item is included in nep-fdg and nep-pay
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Citations: View citations in EconPapers (1)

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