In a new commentary for OMFIF, BWC Member Ousmène Mandeng argues that tokenization could move markets in a frictionless direction and has the capacity to eliminate the need to hold money over time by allowing interest-bearing assets to be converted. Because the value of money comes from transaction frictions that create a liquidity premium, removing those frictions could shrink money balances even as transaction volumes remain high. Money would primarily persist as a unit of account and settlement mechanism, with profound implications for the traditional boundary between banking and capital markets, along with the broader financial system.  

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All views expressed by members are their own and not reflective of the views of the Bretton Woods Committee.