IMF: Tokenization Will Shift Financial Power from Banks to Code

The International Monetary Fund (IMF) has warned that tokenization will lead to a fundamental change in the financial system. According to the IMF, tokenizing assets will weaken the intermediary role of traditional banks, shifting financial power to decentralized code-based platforms. This transformation could challenge banks' dominance in areas ranging from payment systems to credit distribution. Tokenization refers to creating digital representations of physical and financial assets—such as real estate, stocks, or bonds—on a blockchain. The IMF notes that this technology could reduce banks' current commission and intermediary income while also introducing new risks. In particular, the proliferation of smart contracts will enable the automation of processes like lending and asset management. The IMF report also highlights the impact of tokenization on financial stability. The growth of decentralized finance (DeFi) applications may increase regulatory oversight challenges. Additionally, the liquidity and price discovery processes of tokenized assets could be more fragile compared to traditional markets. The IMF therefore emphasizes the importance of international coordination and robust regulatory frameworks. In conclusion, while the IMF acknowledges tokenization as a disruptive innovation in the financial sector, it states that banks must adapt to this transformation. Otherwise, as financial power shifts to code, banks' traditional roles could be severely eroded. In this process, it is critical for regulators to closely monitor technological developments and manage risks. This is not investment advice.