Stablecoins, CBDCs, and tokenised deposits: the new playbook for financial institutions

What does the tokenisation of money really mean, and why are bankers, regulators, and tech innovators suddenly paying such close attention?  

In a wide-ranging conversation we had with authors Michael Salmony, Selim Yazıcı, and C. Coşkun Küçüközmen, based on their latest book called - Tokenisation of Money: From Fiat Currencies to Stablecoins, one thing becomes clear very quickly: we are not just witnessing another fintech trend. We are watching the foundations of the financial system being quietly - but fundamentally - rewired. 

Context and relevance of the book 

The discussion begins with a simple but revealing origin story. What started as years of informal debates, coffees, and conferences between professionals from different corners of the financial world eventually turned into a collaborative book project. Initially focused on central bank digital currencies (CBDCs), the scope quickly expanded. The authors realised that CBDCs alone could not explain the scale of transformation underway. Instead, they shifted toward a broader and more ambitious topic: the tokenisation of money itself. 

That shift is telling. It reflects a wider industry realisation that digital money is no longer about a single innovation or product. It is about an ecosystem of competing and complementary models, stablecoins, tokenised deposits, and CBDCs, each with distinct roles, risks, and opportunities. 

Understanding the terminology 

For readers new to the space, one of the central challenges is simply understanding the terminology. Even among experts, definitions are still evolving. Yet the authors offer a useful lens: while the nature of money hasn’t changed, the way it is issued, transferred, and used is undergoing rapid transformation. 

CBDCs, for instance, are typically issued by central banks and sit at the top of the monetary hierarchy. Tokenised deposits represent commercial bank money in digital, programmable form. Stablecoins, meanwhile, are often privately issued but pegged to fiat currencies, blending elements of both worlds. The differences matter, not just technically, but structurally, because they determine how money flows through the economy and who controls that flow. 

What makes these new forms of money compelling is not just digitisation, but functionality. Real-time settlement, programmability, and global reach are no longer theoretical features; they are becoming practical expectations. In a world where users expect instant responses to messages and transactions alike, waiting days for cross-border payments feels increasingly outdated. 

This is where the conversation turns from definitions to implications. If money can move instantly, 24/7, and across borders without traditional intermediaries, what happens to the infrastructure that has supported finance for decades? 

Implications for the financial system 

According to the authors, everything from correspondent banking to payment messaging systems is being challenged. Traditional models, where transactions pass through multiple intermediaries before settlement, are giving way to more direct, token-based transfers. In simple terms, money can now be ‘wrapped’ into a digital token and sent directly to a counterparty, collapsing multiple steps into one. 

But this transformation is not as simple as replacing old systems with new ones. In fact, one of the biggest tensions highlighted in the discussion is fragmentation. While everyone agrees interoperability is critical, many players are simultaneously building their own infrastructures. The result? A rapidly expanding landscape of platforms that must somehow learn to communicate with each other. 

New business models are emerging alongside this infrastructure shift. Payments, in particular, are at the forefront. Concepts like atomic settlement, where transactions are completed instantly and irreversibly, and programmable payments via smart contracts are moving from theory to experimentation. Compliance, too, could be embedded directly into transactions, a concept often described as ‘compliance by design’. 

Yet for all the excitement, the authors repeatedly return to a note of caution: innovation without understanding is risk. Banks, regulators, and even technology providers must fully grasp the systems they are building. Otherwise, the very efficiencies they seek could introduce new vulnerabilities. 

Real-world use cases 

Real-world examples reinforce the point that this is not just experimentation. From China’s large-scale CBDC trials to institutional initiatives like JPMorgan’s digital coin and Singapore’s Project Guardian, tokenised money is already operating at a significant scale. In fact, transaction volumes in this space have reached into the trillions, still smaller than traditional finance, but growing at a remarkable pace. 

Skepticism and open questions 

At the same time, the geopolitical dimension cannot be ignored. The dominance of US-based stablecoins raises questions about monetary sovereignty, particularly in regions like Europe. If digital dollars become embedded in global payment systems, what does that mean for local currencies? 

This leads to one of the most thought-provoking themes of the conversation: the possibility of competing digital currency blocs. Instead of a unified global system, we could see parallel ecosystems, dollar-based, euro-based, and renminbi-based, each with its own rules and infrastructure. Such fragmentation could complicate interoperability and introduce new forms of financial risk. 

Another critical tension lies in the evolution of stablecoins themselves. Originally rooted in a more decentralised, crypto-driven vision, they are increasingly moving toward institutional models, regulated, backed, and integrated into the traditional financial system. While this shift enhances trust and scalability, it also raises questions about whether the original vision of decentralisation is being diluted. 

Perhaps the most striking insight from the discussion is that this transformation is not about replacing one system with another. Instead, multiple forms of money are likely to coexist, including fiat, stablecoins, tokenised deposits, and CBDCs, each serving different use cases. The real challenge lies in connecting them within a coherent framework. 

And that is where both opportunity and risk converge. On one hand, tokenised money could dramatically improve efficiency, reduce costs, and expand access, particularly in cross-border payments and emerging markets. On the other hand, moving too quickly without robust safeguards could undermine trust, introduce fraud, or destabilise existing systems. 

Final perspective 

Ultimately, the future of money is not predetermined. As the authors emphasise, there are multiple possible scenarios, each shaped by technology, regulation, market dynamics, and geopolitical forces. Rather than offering a single prediction, they outline a range of potential outcomes, inviting readers to think strategically about what comes next. 

If there is one takeaway from this conversation, it is this: tokenisation is not just a technological upgrade. It is a structural shift that forces every participant in the financial system, from banks and regulators to fintechs and end users, to rethink their role. 

And as this new chapter unfolds, one question remains open: will the financial system transform around tokenised money, or will it absorb it and remain fundamentally the same? 

That answer, as the authors suggest, is still being written. 

 

About the editors

 

Selim Yazıcı, Ph.D., is Professor of Management and Organisation at Istanbul University, Co-Founder of FinTech Istanbul, and a leading architect of Türkiye's fintech ecosystem. His research spans digital transformation, financial technologies, and insurtech, and he brings both academic rigour and entrepreneurial practice to this volume. 

 

 

 

C. Coşkun Küçüközmen, Ph.D., is Professor of Finance at Izmir University of Economics and a former senior official at the Central Bank of the Republic of Türkiye and the Banking Regulation and Supervision Agency. A widely published scholar on monetary policy, digital finance, and CBDCs, he bridges institutional expertise with cutting-edge academic research. 

 

 

 

Michael Salmony, Ph.D., is a global advisor to banks, regulators, fintechs, and governments across the world, with decades of experience in payments, digital transformation, and financial technology. He advises institutions at the intersection of policy and practice, bringing strategic clarity to some of the most consequential shifts reshaping the financial system.