(MENAFN- Crypto Breaking) Central banks are exploring the potential of smart contracts and tokenization in a new pilot program led by the Bank for International Settlements (BIS). The BIS, known as the“central bank of central banks,” is collaborating with various financial institutions to test the use of blockchain technology for issuing digital tokens.

This initiative aims to streamline transactions and asset transfers by leveraging the efficiency and security of blockchain. By using smart contracts, central banks can automate processes such as payments and settlements, reducing the need for intermediaries and increasing transparency.

Through tokenization, traditional assets like securities or commodities can be represented as digital tokens on a blockchain. This allows for easier transfer of ownership and increased liquidity in markets. Central banks see the potential for tokenization to revolutionize how value is exchanged and managed in the financial system.

The BIS pilot program is just the beginning of central banks' exploration of blockchain technology. As they continue to experiment with smart contracts and tokenization, we may see a significant shift in the way financial transactions are conducted in the future. Stay tuned for more updates on this innovative development in the world of central banking.

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