The International Monetary Fund warned in a report published on Thursday that the tokenization of financial assets could exacerbate financial crises at a faster pace than central banks’ ability to respond. The report noted that tokenization is not only about reducing costs and speeding up settlement processes, but also represents a radical shift in the financial landscape.

Systemic Risks of Tokenization
In the report prepared by the IMF Chief Economist, Tobias Adrian, the tokenization process was described as going beyond merely improving efficiency. Adrian emphasized that it points to a structural shift in the financial sector. One of Adrian’s key arguments is that traditional financing, while involving certain delay periods that help absorb shocks, has these mitigation mechanisms removed by tokenization.

Traditionally, settlement processes in financial markets—often taking two business days—have given central banks an opportunity to inject liquidity, mitigate risks, and intervene when necessary during periods of volatility. By contrast, digital-symbol-based financial systems, including margin call requirements and algorithmic feedback loops, sharply reduce this intervention window.