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The U.S. financial sector is exploring the idea of tokenizing various financial instruments, including U.S. Treasuries, wholesale central bank money and commercial bank money, which would enable transactions in these instruments to settle on a single shared ledger.

Currently, transactions in various components of the wholesale financial system all take place on separate systems. A new project will examine the concept of tokenizing these instruments to facilitate settlement on a single platform, under existing legal frameworks.

“Building on the results of a previous industry [initiative], this project will further research the settlement of tokenized cash and securities on a common system,” said the Securities Industry and Financial Markets Association (SIFMA) in a release.

SIFMA is serving as project manager, with participation from several large financial institutions including Citi, J.P. Morgan, Mastercard, Swift, TD Bank N.A., U.S. Bank, USDF, Wells Fargo, Visa and Zions Bancorp.

Other project contributors include the Bank of New York Mellon, Broadridge, DTCC, the International Swaps and Derivatives Association, Tassat Group, and the MITRE Corp.

The Federal Reserve Bank of New York will be a technical observer “to gain knowledge on the use of shared ledger technology as infrastructure to conduct transfers between regulated financial institutions, including settling tokenized wholesale central bank money, commercial bank money, and U.S. Treasury securities,” SIFMA said.

“This exploration of shared ledger technology is an important initiative to explore innovations working with digital forms of U.S.-dollar cash and securities, as market participants continue to innovate to support efficient, resilient capital markets,” said Charles de Simone, managing director with SIFMA.