Tokenization Accelerates Finance but Heightens Systemic Risk, IMF Warns

Tokenization also supports various forms of digital money—such as tokenized bank deposits, fiat‑pegged stablecoins, and tokenized central‑bank reserves—allowing them to act as settlement assets on a shared ledger.

It enables high‑quality assets to be swiftly deployed across platforms as collateral.

These benefits, however, come with significant risks.

The hidden danger

According to Adrian, the delays eliminated by tokenization are not merely inefficiencies; they provide banks, regulators and risk managers a window to identify problems before they spread.

Eliminating that buffer means a market shock, a coding error, or an automated selling spree could cascade through the system before anyone can intervene.

“Liquidity demands materialize in real time, collateral calls can be automated, and failures can propagate faster than institutions or supervisors can respond,” he wrote. “Risk that once were borne by the balance sheet of individual institutions behind a transaction become increasingly concentrated in the platforms and code that govern these transactions.”

Adrian also highlighted concentration risk. Tokenization tends to channel activity onto fewer, larger platforms. “When infrastructure becomes the central hub,” he warned, “governance failures become systemic events.”

Regarding cybersecurity, he noted that consolidation onto shared ledgers “amplifies the importance of operational resilience, cybersecurity, and crisis management.”

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