Definition ∞ A tokenized bank deposit is a digital representation of a traditional bank deposit, issued as a token on a distributed ledger. This digital asset maintains a one-to-one value with the underlying fiat currency held in a regulated bank account. It aims to combine the programmability and efficiency of blockchain technology with the safety and regulatory oversight of commercial bank money. Such tokens facilitate faster and more transparent settlements.
Context ∞ Tokenized bank deposits are a significant area of innovation in the digital money landscape, offering a regulated alternative to stablecoins. Discussions often focus on their potential to enhance wholesale payments and securities settlement within existing financial frameworks. A key debate involves ensuring legal clarity and interoperability with other digital asset systems. Future developments will likely see increased experimentation by commercial banks in issuing these tokens for various financial applications.
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