New York Fed and BIS Test Smart Contract-Based Monetary Policy... "Preparing for the Tokenization Era"
Summary
- The New York Federal Reserve and BIS reported testing a tokenized monetary policy using smart contracts.
- The test verified scenarios that automatically execute changes in collateral standards and reserve interest rate adjustments.
- BIS evaluated that smart contracts and tokenization technology can be key tools for central banks in crisis response.
The New York Federal Reserve Innovation Center and the Bank for International Settlements (BIS) Swiss Innovation Hub jointly conducted an experiment on tokenized monetary policy using smart contracts.
According to Cointelegraph, a virtual asset (cryptocurrency) specialized media outlet, on the 16th, BIS announced in a joint report that they tested a prototype allowing central banks to adjust various monetary policy tools in real-time through smart contracts.
According to the report, the two institutions verified scenarios that automatically execute within 10 minutes, such as ▲ changing collateral standards ▲ exchanging with illiquid assets ▲ adjusting reserve interest rates. The test was conducted in an environment built on the Ethereum ERC-20 standard.
BIS evaluated that "smart contracts and tokenization technology can be key tools for central banks to respond to unforeseen situations or rapidly changing crises." However, they added, "Integration with existing financial infrastructure remains a challenge to overcome."
Minseung Kang
minriver@bloomingbit.ioBlockchain journalist | Writer of Trade Now & Altcoin Now, must-read content for investors.
