Tokenized Bank Deposits

Definition ∞ Tokenized bank deposits represent traditional bank deposits issued as digital tokens on a blockchain. These tokens maintain a 1:1 peg to fiat currency held in a commercial bank account, combining the programmability of blockchain with the stability and regulatory oversight of traditional banking. They offer a potential mechanism for faster, more efficient interbank settlements and wholesale payments. Tokenized bank deposits could bridge the gap between conventional finance and decentralized ledger technology.
Context ∞ Tokenized bank deposits are a growing area of interest in financial and crypto news, with major banks and financial institutions exploring their use for wholesale transactions and corporate payments. Discussions often center on their potential to improve liquidity management and reduce settlement risks within existing financial systems. Regulatory bodies are actively studying the implications of tokenized deposits for monetary policy and financial stability, considering them a significant innovation in payment infrastructure.