IMF warns tokenisation removes shock absorbers alongside settlement friction

The International Monetary Fund’s latest Global Financial Stability Report dedicates a full chapter to tokenisation, reaching a conclusion that will give pause to proponents: the delays and intermediaries that make traditional markets slow and expensive also function as buffers that slow the spread of stress. Eliminating them accelerates settlement but may equally accelerate contagion. The Fund stops short of sounding an alarm, noting that tokenised markets remain too small to pose systemic risk at present.

On the benefit side, the IMF draws a careful line between what is already demonstrable and what is still aspirational. Cheaper issuance, reduced reconciliation overhead, and atomic settlement of cash against securities are visible in live markets. The Fund cites early data as evidence of genuine demand for tokenisation’s distinct features: more than half of tokenised equity trading occurs outside US market hours, and roughly 80% of trades involve less than one share, both patterns that conventional markets do not serve well. Automated margining and real-time supervisory reporting, by contrast, remain unrealised.

Perhaps the sharpest observation in the chapter is a methodological one. Many of the efficiency gains attributed to tokenisation are, in the IMF’s reading, actually products of digitisation more broadly and reachable without distributed ledger technology. India’s same-day settlement for certain equities is offered as an illustration. What tokenisation distinctively adds, on this framing, is the co-location of assets, money, and programmable rules on a single shared platform, a narrower but still meaningful claim than the industry typically makes.