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Tokenised money market funds: new technology, familiar risks?

Author

Listed:
  • Born, Alexandra
  • Grill, Michael
  • Lambert, Claudia
  • Schöller, Vanessa
  • Staunton, David
  • Tskhakaya, Anna

Abstract

The market for tokenised money market funds (TMMFs) – money market funds (MMFs) whose shares are issued as tokens on distributed ledgers – remains small but is expanding rapidly. This article explores the specific design features of TMMFs, including the tokenisation of their underlying assets, liabilities and operational processes. It analyses key economic differences between TMMFs and traditional MMFs, with a particular focus on their implications for financial stability. Tokenisation has the potential to enhance efficiency by enabling faster settlement together with near-24/7 availability and programmability, while unlocking new use cases, such as employing TMMF tokens as collateral. However, TMMFs could also amplify risks related to liquidity mismatches and operational fragilities. A dedicated box in this article compares TMMFs with stablecoins, assessing their financial stability implications and interlinkages. Ultimately, the net financial stability impact of TMMFs will depend on how the market evolves, how it will affect prevailing business models and how it will integrate and interact with traditional financial markets. JEL Classification: G23, G28, G32, O33

Suggested Citation

  • Born, Alexandra & Grill, Michael & Lambert, Claudia & Schöller, Vanessa & Staunton, David & Tskhakaya, Anna, 2026. "Tokenised money market funds: new technology, familiar risks?," Macroprudential Bulletin, European Central Bank, vol. 33.
    • Handle: RePEc:ecb:ecbmbu:2026:0033:4
    Note: 1280809
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    Keywords

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    JEL classification:

    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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