Tokenization: Overview and Financial Stability Implications

Francesca Carapella, Grace Chuan, Jacob Gerszten and Nathan Swem
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Nathan Swem: https://www.federalreserve.gov/econres/nathan-swem.htm

No 2023-060, Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.)

Abstract: In this paper we outline tokenization, which is a new and rapidly growing financial innovation in crypto asset markets, and we discuss potential benefits and financial stability implications. Tokenization refers to the process of constructing digital representations (crypto tokens) for non-crypto assets (reference assets). As we discuss below, tokenizations create interconnections between the digital asset ecosystem and the traditional financial system. At sufficient scale, tokenized assets could transmit volatility from crypto asset markets to the markets for the crypto token's reference assets.

Keywords: Tokenization; Crypto-assets; Blockchain; Decentralized finance; DeFi; Financial stability and risk; Financial innovations; Interconnections (search for similar items in EconPapers)
JEL-codes: D49 D53 G00 G10 G20 G23 (search for similar items in EconPapers)
Pages: 29 p.
Date: 2023-09-08
New Economics Papers: this item is included in nep-ban, nep-ger and nep-pay
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedgfe:2023-60

DOI: 10.17016/FEDS.2023.060

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