The Bank for International Settlements (BIS), an organisation representing central banks worldwide, has published a plan to develop central bank digital currencies (CBDCs).

The BIS uses terminology from the blockchain and smart contract industries in its latest annual economic report, arguing that tokenizing fiat money “has great potential” but requires a privately regulated and uniform system.

The BIS uses the study to criticise the cryptocurrency industry’s efforts to develop decentralized monetary systems independent of centralised banks, governments, and intermediaries.

“Crypto not only exists in a vacuum, disconnected from the actual world, but it also lacks the central bank-provided trust foundation that traditional money has.”

The BIS claims that the banking industry’s efforts to build privatised and centralised blockchain systems to tokenize fiat money have resulted in the development of incompatible “silos” that cannot connect.

The organisation claims the key to success with its CBDC strategy is encouraging a system that guarantees banks all over the globe can quickly transfer wealth to one another.

Tokenized claims on financial and real-world assets, such as CBDCs and tokenized deposits, are central to the plan. According to the plan, these parts will eventually be integrated into a single “unified ledger” to revolutionise the financial market infrastructure (FMI).

With central bank money stored in the exact location as other claims, the full advantages of tokenization might be realised in a single ledger. A centralized platform like this might significantly improve the economy’s economic and financial infrastructure by fostering confidence in the central bank.

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