In an interview yesterday, Sebastian Kraft, Senior Product Owner of Commerzbank’s blockchain and DLT activities, spoke about the need to have tokenized cash on ledger to unlock the benefits of blockchain technology. “Either you need fungible tokenized commercial bank money, or maybe even central bank money, which is currently in discussion. In the meantime, a working solution that bridges blockchain networks with traditional payment systems could help,” said Kraft.
Many business blockchain activities involve payment, whether that’s settling an invoice, trade finance, or purchasing a financial asset. Linking out to conventional payment systems introduces the risk of failed payment and reduces the efficiency advantages that blockchain offers. Hence the desire to use tokenized cash.
The Commerzbank executive emphasized the need for fungibility and interchangeability. Two examples of banks that have disclosed tokenized commercial bank money are JP Morgan and Russia’s Sberbank. The challenge is the money is still siloed and can only be sent to other organizations that hold accounts at the same bank.
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