IMF: Policy foundation essential for asset tokenization to succeed

The International Monetary Fund (IMF) has analyzed that while tokenization is driving fundamental changes in the financial structure, a strong policy foundation is essential for its successful implementation. The IMF noted that tokenization can improve efficiency by introducing programmable risk management tools, such as real-time simultaneous settlement and continuous liquidity management. However, it also presents instability factors, including the potential for algorithm-based risk contagion. For tokenization to succeed in the long term, the IMF stated that digital finance must be anchored in public trust. The fund projected three potential future financial architectures: - A "public anchor coordination" model, where the public sector serves as the central pillar of trust to maintain stability. - A "fragmented" model, where regulatory diversification could lead to liquidity isolation and heightened risks. - A "private money-led" model, where private stablecoins become mainstream, raising concerns about contagion risk. The IMF advised that policymakers must respond to these technological shifts to achieve both financial stability and efficiency.