Written by Irene Arias Hofman, CEO, IDB Lab
July 2024
Instantly transacted tokenized assets are estimated to reach US$15 trillion by 2030, carrying with it the potential to reshape sectors like healthcare, education, conservation, and notably, the financial sector.
By enabling the conversion of physical and financial assets into digital tokens on a blockchain network, tokenization offers a transformative opportunity for a more inclusive financial system. When combined with other technologies like generative AI, tokenization holds immense potential to increase access, reduce costs, and improve user experience, particularly for those who are still excluded from accessing financial services.
Its application in finance aims to streamline transactions, expand access, and even expand the frontier of new digital financial products. In particular, its power to create liquidity from normally non-liquid assets is appealing.
The tokenization of financial assets, such as cash, securities, and central bank digital
currencies (CBDCs), opens doors to expedite and automate payments, clearing, and
settlement, with transformational implications in remittances and financial inclusion sectors.
With respect to financial inclusion, the opportunity and the need to act is compelling:
- The existing financial system faces major shortcomings in speed, cost, and accessibility. Tokenization is projected to save up to $20 billion annually in global clearing and settlement costs and can unlock $16 trillion of illiquid assets by 2030.
- There is momentum with multiple initiatives on the policy and regulatory front.
- We are seeing increasing activity of applications on top of web3 networks with increasingly scalable solutions.
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