Key Takeaways
- • Euroclear, DTCC, the European Investment Bank and the World Bank are building out technology and launching and managing tokenized assets, according to the World Economic Forum article.
- • Estimated annual global infrastructure operational cost savings from smart contracts and automated processes are around $15-20 billion.
- • Distributed ledger technology for collateral management could free up more than $100 billion annually in capital for financial institutions.
- • Of $255 trillion in marketable securities in demand as collateral, only $28.6 trillion is actively being used, highlighting the scope for collateral mobility through tokenization.
- • Governance, security and privacy questions remain open, with the Global Synchronizer Foundation, backed by the Linux Foundation, cited as one governance model.
Summary
Tokenization of financial assets on blockchain, in which a digital representation of a physical or financial asset is created to enable secure real-time exchange, moved to the center of institutional and governmental discussion at the World Economic Forum's 2024 Annual Meeting. The article argues that the technology has moved beyond proof of concept and testing into live deployment after several years of investment.
The article identifies fragmentation as the core problem: each asset class trades on separate, ageing technology systems, making it difficult for banks and governments to determine who owns what at any given time. It notes that the Bank of England recently signalled its intention to move ahead with a central bank digital currency, and that Euroclear, DTCC, the European Investment Bank and the World Bank are building infrastructure and launching tokenized assets.
The business case rests on operational savings, shorter settlement cycles, 24/7 market operations and capital efficiency. The article cites estimated annual global infrastructure cost savings of roughly $15-20 billion and more than $100 billion in capital that could be released annually through distributed ledger collateral management. It contrasts current message-based systems dating to the 1970s with blockchain's atomic network connectivity.
The article cites several live examples. Euroclear and the World Gold Council tokenized gold, Gilts and Eurobonds for collateral management. The Hong Kong Monetary Authority's Project Evergreen, which began in 2021, issued its first green bond in February 2023 and a multicurrency issuance in February 2024 involving HSBC Orion and Goldman Sachs DAP technology. Goldman Sachs has operated an end-to-end tokenized asset infrastructure for over a year, and the European Investment Bank issued a digital bond in pound sterling on HSBC Orion in January 2023. BlackRock and Franklin Templeton have launched tokenized mutual funds, and Bitcoin and Ether ETFs have attracted billions of dollars, which the author characterizes as modest relative to future opportunities.
The article acknowledges open questions on ledger responsibility, security, privacy and governance. It points to the Global Synchronizer Foundation, an independent entity supported by the Linux Foundation, as one governance model providing transparency and organizational neutrality. The piece is an opinion contribution, and its views are those of the author rather than the World Economic Forum.
The article identifies fragmentation as the core problem: each asset class trades on separate, ageing technology systems, making it difficult for banks and governments to determine who owns what at any given time. It notes that the Bank of England recently signalled its intention to move ahead with a central bank digital currency, and that Euroclear, DTCC, the European Investment Bank and the World Bank are building infrastructure and launching tokenized assets.
The business case rests on operational savings, shorter settlement cycles, 24/7 market operations and capital efficiency. The article cites estimated annual global infrastructure cost savings of roughly $15-20 billion and more than $100 billion in capital that could be released annually through distributed ledger collateral management. It contrasts current message-based systems dating to the 1970s with blockchain's atomic network connectivity.
The article cites several live examples. Euroclear and the World Gold Council tokenized gold, Gilts and Eurobonds for collateral management. The Hong Kong Monetary Authority's Project Evergreen, which began in 2021, issued its first green bond in February 2023 and a multicurrency issuance in February 2024 involving HSBC Orion and Goldman Sachs DAP technology. Goldman Sachs has operated an end-to-end tokenized asset infrastructure for over a year, and the European Investment Bank issued a digital bond in pound sterling on HSBC Orion in January 2023. BlackRock and Franklin Templeton have launched tokenized mutual funds, and Bitcoin and Ether ETFs have attracted billions of dollars, which the author characterizes as modest relative to future opportunities.
The article acknowledges open questions on ledger responsibility, security, privacy and governance. It points to the Global Synchronizer Foundation, an independent entity supported by the Linux Foundation, as one governance model providing transparency and organizational neutrality. The piece is an opinion contribution, and its views are those of the author rather than the World Economic Forum.
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