Currency tokenization is the process of representing traditional fiat currencies as digital tokens on a blockchain. These tokens are typically pegged in value to their underlying fiat counterpart, such as the US dollar or Japanese Yen. This enables the programmable use of conventional money within decentralized applications and facilitates faster, cheaper transfers. It transforms a sovereign currency into a blockchain-compatible asset.
Context
The development of central bank digital currencies (CBDCs) represents a significant aspect of currency tokenization, with many nations exploring or implementing their own digital fiat versions. A critical future development involves the establishment of regulatory standards for stablecoins and other tokenized currencies to ensure their stability and consumer protection. Discussions frequently address the potential impact on monetary policy and the traditional banking system.
The integration of stablecoins as a pre-funding rail for Visa Direct minimizes cross-border settlement friction, delivering instant liquidity and optimizing global treasury operations.
The DLT-powered service provides corporate treasurers with real-time, 24/7 liquidity and T+0 settlement for cross-border fund transfers, optimizing global cash concentration.
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