OECD report: Tokenization adoption faces challenges, liquidity and network effects are key barriers

The Organization for Economic Co-operation and Development (OECD) report analyzes the reasons why tokenization has not been adopted more quickly, noting that while tokenization brings efficiency gains, improved securities settlement, and opportunities for innovation, it faces many challenges.
The report cites the lack of a sufficient investor base as the main obstacle, leading to a lack of liquidity and making issuers wary of tokenization. Sovereign bond issuance can help promote the development of tokenization, as in the case of Slovenia.
At the same time, the OECD emphasizes that quasi-sovereign issuers such as the World Bank and the European Investment Bank are active, but liquidity problems are mostly solved by integration with traditional systems, which also undermines the potential advantages of tokenization.
Another challenge is the "chicken-and-egg" issue of network effects, which makes it difficult to justify investments before network effects materialize. In addition, many institutions face technical debt and lack the funds to upgrade to distributed ledger technology (DLT).