Tokenized Finance: What Are the Tradeoffs?

There’s a lot of talk about “digital currency,” but as far as I can tell, my bank account and retirement account, along with my credit cards and mortgage payments, have already been maintained in digital form for many years now. I benefit from greater speed, less paperwork, and probably greater accuracy, too. The genuinely new idea at present is “tokenization.” Tobias Adrian dispassionately lays out the potential risks and benefits in “Tokenized Finance” (International Monetary Fund, Note/2026/001, April 2026). In the current conventional form of digital currency, money flows between institutions and their balance sheets: my credit card company pays the restaurant for my meal, at the end of the month my bank pays my credit card bill, my employer puts money into my bank account, and so on. The institutions in this system provide checks and balances, making sure the payments are correct. For example, maybe 2-3 times each year year I get an email from my credit card company asking if I…