A new BIS Bulletin sets out the potential — and the roadmap — for Government Bond tokenization. With global debt markets valued at over $80 trillion, even modest efficiency gains from tokenization could unlock transformative benefits for Capital Markets and Monetary Policy.
1. Market Efficiency – Tokenized bonds show narrower bid-ask spreads and comparable issuance costs to conventional bonds, hinting at lower friction and higher liquidity.
2. Broader Access – Lower minimum investment thresholds and programmable features could democratize participation, opening bond markets to SMEs and retail investors.
3. Programmability in Action – Smart contracts enable automated Collateral Transfers, DvP settlement, and tokenized repos, offering new tools for Central Banks and institutional investors.