The International Monetary Fund (IMF) recently issued a warning regarding token-based finance, suggesting that it could potentially trigger a financial crisis faster than central banks can respond, despite the promises of cost reduction and settlement delays elimination. According to a report from the IMF this past Thursday, authored by IMF Financial Advisor Tobias Adrian, tokenization represents a “structural shift in financial architecture” rather than just a marginal efficiency improvement, making it one of the most detailed policy assessments on systemic risks of tokenization to date.
Adrian’s main concern is that the inefficiencies tokenization aims to eliminate actually act as shock absorbers. The traditional two-day settlement window gives central banks time to mobilize liquidity, net exposure, and intervene before settlement becomes final, which token-based systems eliminate by design. The report mentions that automatic margin calls and algorithmic feedback loops shorten the available time for intervention. Emergency lending facilities by central banks are built for the business day cycle, not the 24/7 automated environment.
Stablecoins are highlighted by Adrian as a structural weak point, comparing them to money market funds: functional in calm conditions but vulnerable to large-scale withdrawals when trust collapses. He notes that even fully-backed stablecoins rely on the issuer’s operational capacity to meet redemptions and the liquidity of the underlying government securities market.
“Stablecoins without access to central bank reserves require additional safeguards at the infrastructure level, including higher liquidity buffers and conservative margins, to offset settlement asset risks,” Adrian wrote in the report.
