Definition ∞ Bank-backed tokens are digital assets issued and supported by traditional financial institutions, typically commercial banks. These tokens usually represent fiat currency held in reserve by the issuing bank, providing a digital equivalent with the backing of a regulated entity. They aim to merge the efficiency of blockchain technology with the stability and trust of conventional banking systems.
Context ∞ The emergence of bank-backed tokens is a significant development in the intersection of traditional finance and digital assets, frequently discussed in terms of regulatory acceptance and integration into existing financial infrastructures. Their role in facilitating interbank settlements and cross-border payments is a key area of focus. Regulatory frameworks are evolving to accommodate these new forms of digital money.
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