Settlement Infrastructure Lags Tokenisation, Creating Systemic Risk in Wholesale Markets

A commentary published by Fnality argues that the rapid proliferation of tokenised assets and real-time payment systems has outpaced the settlement infrastructure that underpins them, creating a structural gap with material implications for financial stability. The author, drawing on experience running global markets businesses at major banks and overseeing open market operations at the Federal Reserve Bank of New York, contends that faster execution without equivalent settlement finality does not eliminate risk but redistributes it at greater velocity.

The scale of the exposure is substantial. Swift facilitates roughly five trillion dollars in cross-border payment flows daily, with wholesale activity between banks and broker-dealers representing the most concentrated pocket of settlement risk. Stablecoins and tokenised deposits can obscure this exposure by creating the appearance of instant settlement while the underlying cash movement still takes hours or days to complete. Banks continue to rely on batch processing and correspondent banking networks that require pre-funding and liquidity buffers to bridge timing mismatches, adding cost and operational complexity that constrains institutional scaling.

The piece points to central bank money settlement as the appropriate anchor for systemically important wholesale markets, arguing that stablecoins are ill-suited for that role given opaque reserve backing, slow fiat redemption, and demonstrated de-pegging behaviour under stress. DTCC‘s plans to tokenise treasuries and other securities, with production trades expected as soon as July, are cited as evidence that blockchain technology is now entering systemically important infrastructure, raising the urgency of resolving the settlement layer before that activity scales further.

The likelier read of this piece is that it functions as positioning ahead of Fnality’s own central-bank-reserve settlement model, framing the problem in terms that make that architecture the logical solution. Operators building or procuring settlement rails for tokenised asset workflows should treat the execution-to-finality gap as an active risk management question rather than a future roadmap item.