Tokenized Bank Liabilities

Definition ∞ Tokenized bank liabilities represent traditional bank deposits or other financial obligations issued as digital tokens on a distributed ledger. These tokens are claims against a commercial bank, maintaining the same legal status as conventional bank balances but offering the programmability and instant settlement features of blockchain technology. They facilitate faster, more efficient digital transactions within regulated frameworks. This innovation bridges traditional banking with digital ledger capabilities.
Context ∞ Tokenized bank liabilities are a key area of exploration for traditional financial institutions seeking to leverage blockchain technology while maintaining regulatory compliance. Discussions focus on the legal and operational frameworks required to issue and manage these tokens securely, ensuring their equivalence to traditional money. These developments are watched closely as they could bridge the gap between traditional finance and decentralized ledgers, offering new avenues for wholesale and retail payments. Their successful implementation could reshape financial infrastructure.