Definition ∞ A commercial bank token is a digital representation of a commercial bank’s liabilities, issued on a distributed ledger technology platform. These tokens facilitate instant, programmable payments and settlements within specific financial ecosystems. They typically represent claims on the issuing bank, maintaining a stable value against a fiat currency. Such tokens offer enhanced efficiency and reduced counterparty risk for institutional transactions.
Context ∞ The primary focus surrounding commercial bank tokens involves their potential to modernize interbank settlements and corporate treasury management by enabling atomic transactions. Discussions frequently address the regulatory treatment and operational standards necessary for their widespread adoption within existing financial infrastructures. A key future development includes the potential for these tokens to become a standard mechanism for clearing and settlement in wholesale markets. This advancement could significantly alter the landscape of traditional payment systems.
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