Bank Tokenization

Definition ∞ Bank tokenization involves converting traditional financial assets into digital tokens on a blockchain. This process represents real-world assets such as bonds, equities, or real estate as programmable units. It facilitates fractional ownership, automates transactions through smart contracts, and enhances liquidity by enabling 24/7 trading. This innovation streamlines asset management and transaction settlement within regulated financial frameworks.
Context ∞ The current discourse around bank tokenization centers on its potential to revolutionize conventional finance through increased efficiency and reduced operational costs. Key discussions involve navigating existing regulatory frameworks to permit the issuance and trading of tokenized securities. Future developments will likely focus on interoperability between different blockchain platforms and broader institutional adoption of these digital representations of value.