BIS: Traditional Financial Institutions Group's Transition to Tokenization May Be Risky

The Bank for International Settlements (BIS) report highlights that major Financial Institutions Groups are piloting tokenized deposits to improve settlement efficiency and programmability, but there may be risks associated with the transition to tokenization in traditional finance, including potential governance and legal framework issues as well as credit, liquidity, custodial and operational risks, which may differ from those faced by traditional market infrastructures and therefore require a comprehensive assessment by central banks.
Of course, tokenization also has many benefits, including lower transaction costs and faster transaction speeds. Governance, legal, and liquidity risks are central banks' main concerns for tokenized assets.