Central banks are exploring the use of smart contracts to execute monetary policy in tokenized environments, indicating a rising interest in merging blockchain technology with traditional finance. A collaborative study by the Federal Reserve Bank of New York’s Innovation Center and the Bank for International Settlements (BIS) Innovation Hub Swiss Centre revealed that smart contracts could provide central banks with adaptable and swift tools in a tokenized financial system. The study, known as Project Pine, introduced a prototype toolkit for customizable monetary policy in a tokenized form, enabling central banks to quickly adjust tools in hypothetical scenarios. This initiative showcases the potential advantages of tokenization for central banks, emphasizing the speed and consistency of smart contracts in executing monetary policy. While acknowledging the benefits, the report also highlighted potential infrastructure challenges that central banks may encounter in adopting such advanced technologies. Read more AI-generated news on: https://app.chaingpt.org/news