Central banks are experimenting with smart contracts to implement monetary policy in tokens environment, indicating increasing interest in integrating blockchain technology in traditional finance.
According For a joint research study of the Federal Reserve Bank of New York’s Innovation Center and Bank for International Settlements (BIS) Innovation Hub Swiss Center, smart contracts can provide flexible, rapid response tools to central banks in a token financial system.
According to the BIS report published on 15 May, the study, dubbed project Pine tested a prototype “token toolkit” for further research by central banks for further research.
“Smart contract toolkit was sharp and flexible,” BIS wrote. “In the fictional landscapes, the central bank was able to immediately add and change the equipment.”
The report emphasized that if tokening is widely adopted for money and securities, smart contracts can play a central role on how monetary policy is executed.
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This is a “first step” in highlighting the potential benefits of tokens for central banks according to BIS.
The framework “speed and stability” was “valid” within a 10-minute imaginary scenario, where central banks quickly replaced the collateral criteria and exchanged the liquid collateral between the fall of collateral values.
The Smart-Contract Framework allowed central banks to offer a new feature and change the interest rates on the reserves in “immediate” implementation.
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Smart contracts, Tokenization can help central banks
Smart contracts and tokening techniques can help central banks’ rapid response to “extraordinary events”, BIS report said:
“This speed, combined with the ability to accommodate any parameter at any time, gives flexibility to central banks in response to unexpected events and rapid growing crises.”
Promising, the report also admitted that central banks would face infrastructure challenges, as most of the current systems have not been designed for these advanced use cases.
Project Pine employed the ERC -20 token standard of the atherium with another standard for “access control”.
Financial institutions have adopted rapid tookation in recent years.
In the consensus 2025 conference, Joseph Spiro, Director of Excise in DTCC Digital Assets, The “correct” financial instrument is called Stabelcoin For real -time collateral management for financial transactions such as debt or derivatives.
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