Central banks are experimenting with smart contracts to implement monetary policy in tokenized environments, signaling the growing interest in the integration of blockchain technology with time-honored finances (Tradfi).
According to For a joint study of research conducted by the Federal Reserve Bank of Fresh York Innovation Center and Bank for International Settlements (BIS) Innovation Center, smart contracts can be offered by central banks malleable, brisk tools of brisk response in a toxated financial system.
The study, called Project Pine, has tested the prototype “general configurable monetary policy tool set” for further research carried out by central banks, in accordance with the BIS report published on May 15.
“Smart contract toolkit was fast and flexible,” Bis wrote. “In hypothetical scenarios, the central bank was able to add and change tools immediately.”
The report emphasized that if tokenization is widely accepted for money and securities, smart contracts can play a key role in the implementation of monetary policy.
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According to BIS, this means a “first step” in emphasizing the potential benefits of token for central banks.
The “Speed and Cohesion” framework was “approved” in a 10-minute hypothetical scenario, in which central banks quickly changed the security criteria and exchanged polished protection for unleasy values among the falling security values.
The structure of smart control also allowed central banks to implement a fresh facility offering reserve and change the interest rates of reserves in “immediate” implementation.
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Bright contracts, tokenization can facilitate central banks
Bright agreements and tokenization technology can facilitate in the quick response of central banks to “unusual events,” said the BIS report:
“This speed, combined with the possibility of adjusting any parameters at any time, ensures the flexibility of central banks in responding to unforeseen events and rapidly moving crises.”
Although promising, the report also confirmed that central banks will probably be exposed to infrastructure challenges, because most existing systems are not intended for these advanced utilize cases.
Project Pine used the ERC-20 ETHEREUM standard in combination with another “access control” standard.
Financial institutions in recent years have increasingly accepted tokenization.
At the Conference of consensus 2025 Joseph Spiro, product director at DTCC Digital Assets, called Stablecouins a “excellent” financial instrument for real -time security management for financial transactions, such as loans or derivatives.
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