Stablecoins and tokenized deposits
Two ways to put private money on a ledger that settles differently. What backs each, how you redeem it, and what risk you keep are what separate them.
L0 Explain simply
If a CBDC is central-bank money in digital form, the next two instruments are private money in digital form — and the difference matters. A stablecoin is a digital token whose issuer aims to keep it worth a fixed amount of a currency, say one unit for one euro. A tokenized deposit is an ordinary bank deposit represented as a token on a ledger, still a claim on the bank that holds it. Both can move on a shared ledger and settle quickly; both are commercial, not central-bank, money. The plain question to ask of either is the same one from the first topic: whose promise is this, and what stands behind it? *These are forward-looking, design-dependent instruments. Descriptions here are illustrative and labelled SYNTHETIC / TRAINING ONLY; concrete designs, backing arrangements, and rules vary by jurisdiction and were not verified against a primary source this pass.*
L1 Core concepts
The safety of a stablecoin lives in its backing and its redemption. A fiat-backed stablecoin claims to hold reserve assets — cash and short-term instruments — equal to the tokens in issue, so a holder can redeem one token for one unit of currency on demand. Whether that promise holds depends on what the reserves actually are, whether they are segregated, and whether redemption works under stress; when it does not, the token can trade below par. A tokenized deposit starts from a different place: it is a claim on a supervised bank, inside the existing framework of deposit rules, so it inherits that bank's protections and its credit risk. Read as settlement assets, they differ in who you are exposed to. Settling in a stablecoin exposes you to its issuer and reserves; settling in a tokenized deposit exposes you to the issuing bank; settling in central-bank money exposes you to neither private party. The comparison in this topic lays those columns side by side.
L2 Practitioner view
The reason these instruments attract attention is what a shared ledger lets you do at the moment of settlement. Tokenized settlement means representing the assets and the money on ledgers so that a transfer can be recorded and made final programmatically. Its headline capability is atomic settlement: two legs of an exchange — say a security against its payment — either both complete or both fail, with no window in which one party has delivered and the other has not. That removes a specific, real risk from today's sequenced settlement. A related idea is a unified ledger: a common platform where tokenized central-bank money, tokenized deposits, and other assets could sit together, so atomic exchanges span them without stitching separate systems. Two cautions belong here. First, atomicity solves timing risk, not credit or backing risk — a stablecoin that settles atomically is still only as sound as its reserves. Second, none of these designs is settled practice. *Every specific above is illustrative and unverified against a primary source this pass; treat singleness-of-money at par as the property these designs must preserve, not one they can assume.*
Sources for this topic3
- Official requirement
Principles for financial market infrastructures ↗ — CPMI and IOSCO (Bank for International Settlements)
Published by the CPSS (now CPMI) and IOSCO; contains 24 principles plus responsibilities for authorities. This site uses it only for high-level concepts such as settlement finality.
- Market practiceMarch 2003 edition
A glossary of terms used in payments and settlement systems ↗ — CPSS (now CPMI), Bank for International Settlements
Terminology has evolved since this edition; newer CPMI publications refine some definitions.
- Simplified educational illustration
Payments Signal editorial teaching models — Payments Signal
Used wherever diagrams, scenarios, figures, or example values are didactic constructions rather than sourced facts; every such use carries a simplifications disclosure. All people, companies, banks, and list entries in examples are fictional.
Deepest material on this page: L2 — Practitioner view. Where a topic stops short of implementation depth, that is a deliberate coverage decision, not an oversight — see coverage.