The philosophy of assets, money and financing took a new dimension this year when the Federal Reserve introduced the Bank Term Funding Program (BTFP). With flailing banking institutions able to mark-to- market their low-yield bonds and take out a loan at par value because they would be held-to-maturity (HTM), finance opened up various new possibilities.
This report examines counterparty considerations for depositors and how tokenised assets could shape up to be a safer asset class. With protection schemes for deposits being a fraction of outstanding bank liabilities, depositors and investors begin to look at alternative assets that can protect them from potential bank failures, capital controls and interest rate risk.
We also look at how tokenised assets, such as stablecoins and bonds, can be used to improve the financial system.