Definition ∞ A bank-issued token is a digital asset created and distributed by a regulated financial institution. These tokens often represent a claim on a fiat currency held by the issuing bank, functioning as a stable digital representation of traditional money. They leverage blockchain technology for efficient settlement and transfer within controlled environments.
Context ∞ The emergence of bank-issued tokens signals a shift in traditional finance toward digital asset adoption, with central banks and commercial banks exploring their utility for wholesale and retail payments. Discussions frequently center on their potential to enhance payment system efficiency, reduce transaction costs, and provide programmable money features, all while adhering to existing financial regulations.
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