Currently, several new forms of digital money are invented through tokenization. Banks are exploring tokenized deposits, or Commercial Bank Money Tokens (CBMT), as a way to modernise their offerings. However, much of this innovation is happening outside their direct control, often spearheaded by fintech players and driven by clients demanding solutions like stablecoins for cross-border payments. Additionally, central banks and regulators are beginning to enforce support for digital currencies such as retail Central Bank Digital Currencies (CBDCs), as seen with MAS on the pilot use of wholesale CBDCs in Singapore and the European Central Bank’s initiatives in Europe.

As of September 2024, three countries have successfully launched retail Central Bank Digital Currencies (CBDCs), while 35 countries are currently in the pilot phase of their CBDC projects. Additionally, 12 countries are engaged in research to explore the feasibility and implications of CBDCs, and 13 countries are actively developing their digital currencies.
 
Emerging tokenized forms of money, especially those running on blockchain, operate fundamentally differently from traditional currencies. We have seen new forms of digital fiat money being invented through tokenization running on chain, including central bank money, commercial bank money, regulated stablecoins, and money market funds. These new kinds of money will technically be managed on different flavours of distributed ledgers instead of centralised databases. As a result, banks and other financial institutions must modernise their systems to ensure they can manage and transact with tokenized money effectively. This transformation will impact the IT infrastructure, core processes, and even strategic operations.
 
In this roundtable, we will explore the key considerations FI players need to address as they prepare for this shift, including technical, regulatory systems, and operational challenges.