The Bank for International Settlements published an assessment stating that tokenization can improve aspects of wholesale cross-border payments through reduced reconciliation needs and faster finality. The analysis draws on experiments conducted by central banks and considers how distributed ledger records could replace certain correspondent banking steps. Market participants have noted that tokenized representations of cash or securities may allow atomic settlement across borders. This development occurs while asset managers continue to launch tokenized treasury products such as BlackRock’s BUIDL and Franklin Templeton’s BENJI. The report avoids prescriptive recommendations and instead maps observed frictions to possible token-based solutions.

The BIS serves as the principal forum for central bank cooperation and provides analysis on monetary and financial stability issues. Its committees regularly publish reports on payment systems, clearing, and emerging technologies that affect wholesale markets. Previous BIS work has addressed stablecoins, central bank digital currencies, and the tokenization of securities. The current publication builds on that foundation by focusing specifically on cross-border wholesale flows rather than retail use cases. Readers unfamiliar with the institution should note that its statements often inform regulatory approaches taken by member central banks.

Mechanics Outlined in the BIS Analysis

The report describes how tokenization allows payment instructions and asset transfers to occur on a shared ledger, potentially eliminating sequential messaging between banks. In a tokenized environment, ownership records and cash balances can be updated simultaneously once consensus or validation rules are satisfied. This differs from traditional SWIFT-based flows that rely on multiple nostro accounts and delayed confirmations. The BIS notes that smart contracts could embed compliance checks such as sanctions screening directly into the transfer process. Experiments referenced in the document illustrate how tokenized deposits or central bank reserves might serve as settlement assets for cross-border trades.

Additional mechanical detail covers interoperability requirements between different ledger platforms and legacy systems. The analysis indicates that without standardized messaging formats and legal recognition of ledger entries, efficiency gains may remain limited. Several central banks have tested atomic delivery-versus-payment mechanisms using tokenized instruments, though none have yet scaled to full production for cross-border volumes. The BIS emphasizes that legal certainty around finality and ownership remains a prerequisite before operational changes occur. These observations align with ongoing work by organizations such as the Monetary Authority of Singapore and the European Central Bank on wholesale CBDC pilots.

Relevance to Tokenized Asset Markets

Improvements in cross-border payment rails would directly support secondary market activity in tokenized securities and funds. Institutions issuing products such as Ondo’s OUSG or Backed Finance certificates require reliable settlement mechanisms when counterparties reside in different jurisdictions. Faster and more predictable payment finality could lower operational costs and reduce the need for pre-funding across multiple time zones. The BIS findings therefore intersect with the broader infrastructure stack that includes custodians, transfer agents, and oracle providers such as Chainlink. Market participants view payment efficiency as one of several prerequisites for wider institutional adoption of tokenized real-world assets.

Report Focus

Wholesale cross-border payments

Source

The Block

Entities Referenced

BIS, BlackRock, Franklin Templeton

Prior BIS publications on payment systems have addressed correspondent banking inefficiencies without referencing tokenization. The current document updates that discussion by incorporating ledger-based models tested since 2020. Competing approaches include enhancements to existing messaging networks and the introduction of central bank digital currencies for wholesale use. The tokenized route differs because it ties payment rails directly to asset ownership records rather than treating them as separate layers. Observers note that both CBDC and tokenized deposit models are being explored in parallel by several jurisdictions.

"tokenization can improve wholesale cross-border payments"

Regulatory Considerations and Next Steps

The BIS analysis touches on legal questions surrounding the recognition of ledger entries as authoritative records of ownership and payment finality. Jurisdictions differ in how they classify tokenized instruments, which affects whether existing payment or securities laws apply without amendment. The report does not advocate specific regulatory changes but highlights areas where clarification would be required before scaled adoption. Central banks and supervisors participating in BIS committees are expected to incorporate these observations into their own policy work. Market participants should monitor forthcoming guidance from bodies such as the SEC, MAS, and FCA on cross-border settlement using distributed ledgers.

Infrastructure Developments to Monitor

Future milestones include additional wholesale CBDC pilots that incorporate tokenized commercial bank deposits and further interoperability testing between permissioned ledgers. Private-sector projects involving tokenized treasuries will likely continue to seek integration with improved payment rails. Observers will watch whether any central bank moves to accept tokenized assets as collateral in its operations. These steps would provide concrete signals on whether the efficiency gains identified by the BIS can be realized at scale. The timeline remains uncertain given the need for coordinated legal and technical changes across multiple jurisdictions.

→ The takeaway

The BIS assessment supplies a measured evaluation of tokenization’s possible role in wholesale payments without overstating near-term outcomes. It situates the technology within existing central bank work on payment systems and identifies concrete friction points that ledger-based solutions might address. Institutions building tokenized asset platforms can use the report to anticipate requirements around interoperability, legal finality, and compliance integration. Continued experimentation by both public and private actors will determine whether the outlined benefits materialize in production environments.