The battle over the future of digital money is becoming less about choosing between stablecoins, tokenised bank deposits and central bank money, and increasingly about building infrastructure capable of allowing all three to coexist.
Digital Money Race Shifts
For much of the past several years, debate has centered on which form of digital currency might ultimately dominate payments.
Yet banks, payment networks and financial market infrastructures are now pursuing a more pragmatic approach: connecting new programmable forms of money with the regulated systems that already move trillions of dollars around the world.
That shift could prove more significant than the individual tokens themselves.
Banks Bring Deposits On-Chain
Tokenised deposits are emerging as one of the banking industry’s preferred responses to stablecoins.
Unlike privately issued stablecoins, tokenised deposits remain liabilities of regulated commercial banks. They can nevertheless incorporate blockchain characteristics such as programmability, 24-hour availability and potentially atomic settlement, where payment and asset transfers occur simultaneously.
Major institutions are already attempting to move the concept beyond individual-bank experiments.
The Clearing House announced in June that a group of large US financial institutions is developing infrastructure to clear and settle tokenised commercial bank money, linking blockchain networks with existing banking and central-bank settlement arrangements.
Swift, meanwhile, has developed its own blockchain-based ledger for tokenised deposits, with 17 international banks preparing live pilot transactions. The system is intended to support round-the-clock cross-border payments while retaining existing compliance and banking relationships.
Interoperability Becomes the Prize
The emerging architecture suggests stablecoins and tokenised deposits may serve different purposes rather than exist in a winner-takes-all market.
Stablecoins have advantages in open blockchain environments and international value transfer. Tokenised deposits potentially offer banks a way to provide similar programmability while retaining deposits, customer relationships and established regulatory protections.
The IMF argues that tokenisation could compress payments, settlement and reconciliation into shared programmable infrastructure, but warns that faster settlement also creates new liquidity and operational risks.
The BIS has been more cautious about stablecoins, arguing that maintaining convertibility at par and preserving the “singleness” of money remain fundamental challenges. It sees tokenised commercial bank money, supported by central-bank settlement, as a potentially stronger foundation.
Digital Money Becomes a Plumbing Problem
For the payments industry, the implication is that the decisive competitive advantage may not belong to whoever issues the most successful token.
It may instead belong to the networks, processors and banks capable of making different forms of money interchangeable without customers needing to understand what happens underneath.
That would make the next phase of digital money considerably less about cryptocurrency — and much more about payments infrastructure.
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