Bank-Issued Tokens

Definition ∞ Bank-Issued Tokens are digital assets created and distributed by regulated financial institutions. These tokens typically represent a claim on a fiat currency held by the issuing bank, functioning as a form of digital money. They aim to merge the efficiency of blockchain technology with the stability and regulatory compliance of traditional banking systems. Such tokens can facilitate faster and cheaper interbank settlements and wholesale payments.
Context ∞ A key discussion surrounding bank-issued tokens involves their potential to modernize financial infrastructure while adhering to existing regulatory frameworks. Their adoption could significantly alter payment processing and liquidity management within the banking sector. Critical future developments include the standardization of token protocols and broader interbank collaboration to create a unified digital currency ecosystem.