There are other benefits as well. Tokenization allows different forms of digital currency, such as tokenized bank deposits, fiat-linked stablecoins, and tokenized central bank reserves, to operate seamlessly as settlement assets on the same ledger.
It also allows high-quality assets to be deployed quickly across all platforms as collateral.
But all this is not without risk.
The hidden danger
The delays eliminated by tokenization are not just inefficiencies, Adrian wrote. They also give banks, regulators and risk managers time to spot problems before they spread.
Remove that buffer, and a market shock, coding error, or sudden wave of automated sales could ripple through the system before anyone can intervene.
“Liquidity demands materialize in real time, collateral calls can be automated, and bankruptcies can spread faster than institutions or supervisors can respond,” he writes. “Risk [sic] that were once borne by the balance sheets of the individual institutions originating a transaction, are becoming increasingly concentrated in the platforms and code that govern those transactions.
Adrian also reported a concentration risk. Tokenization tends to channel activity to fewer and larger platforms. “When infrastructure becomes the central hub,” he warned, “governance failures become systemic events.”
On cybersecurity, he warned that consolidation on shared ledgers “amplifies the importance of operational resilience, cybersecurity and crisis management.”
