This makes it possible to make digital representations of assets such as deposits, shares and bonds stored on a blockchain.
The main manager of the RBI, Suvendu Pati, said that the pilot will use the wholesale segment of her Central Bank Digital Currency (CBDC) as the underlying layer for the exercise. The RBI works together with “a few banks” on the project.
“From a regulatory position for tokenization of an underlying asset, we believe that integrity and enforceability should be determined,” said Pati. “Risks with assets -tokenization are manageable and can be tackled through regulatory guardrails.” He stated that the Central Bank is also investigating experiments with tokenization in money market instruments.
It is known that digital tokenization makes transactions faster, cheaper and safer. In a financial context, tokenization refers to the representation of a real-world financially active in digital form (a “token”) on a safe ledger (often blockchain or distributed ledger technology). In the case of deposit to -smelling, deposits kept at banks would be displayed as tokens, which can then be used, transferred or smoother about systems.
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