The Digital Assets Programme

In times of intensified decarbonisation efforts to combat climate change, digital assets have come under increased scrutiny for their perceived negative environmental footprint. Mounting concerns among environmentalists, industry participants, and public bodies have sparked a heated debate around the sustainability of the underlying platforms and whether immediate policy action is needed. Financial institutions and other stakeholders across the value chain now face significant ESG and business conduct risks that need to be managed given the considerable interests at stake.

Focusing primarily on the “E” component in ESG, research projects within this thematic stream will explore a wide range of environmental externalities surrounding digital assets stemming from the underlying networks, platforms and related activities, as well as examine the various types of risks for different stakeholders that may arise from direct involvement and/or indirect exposure. The main goal is to provide authoritative data and insights about the broader environmental implications of digital assets to facilitate a balanced discussion guided by facts and empirical evidence.

dFMI, an umbrella term referring to a broad set of digital systems, platforms, and applications that automate the delivery of certain financial services or functions, holds the promise of creating an open, interoperable financial system that is based on programmability, composability, and transparency. Many dFMI components operate as shared ecosystem utilities with new primitives that differ substantially from traditional financial markets. As these services increasingly attract substantial inflows and new users, it is imperative to better understand the underlying assumptions to ensure the safe operation of foundational infrastructure.

Focusing on the ‘infrastructure’ side of the digital asset ecosystem, research projects within this thematic stream will study the core building blocks – the rails, platforms, and applications – that enable new digital financial services and analyse the broader impact on market structures, regulatory frameworks, and the real economy. The major objective is to understand the extent to which technology-enabled financial services create new value and reduce certain types of risks while introducing others.

dFMI systems serve the function of both an asset registry and transfer rail. The former enables not only the emergence of new asset classes (e.g. cryptocurrencies as a type of synthetic commodities), but also the digitisation of existing asset classes under new forms (e.g. via tokenisation). The latter enables, barring deliberate restrictions, seamless and near-instant swaps between these assets. This combination creates an environment where any tangible or intangible object of value may be transformed into a financial asset – and potentially be used and perceived as a means of payment under specific circumstances. As a result, dFMI will likely contribute to a significant increase in the number of generally available forms of quasi-money with varying properties, functionality, and risk profiles.

Focusing on the ‘asset’ side of the ecosystem, this research stream will investigate the socio-economic, financial, legal, regulatory, and cultural implications of asset digitisation and tokenisation on payments, commerce, and money more broadly. The main goal is to understand how technology- enabled types and forms of assets affect consumer and business behaviour, existing payment and monetary arrangements, and the stability of the broader financial system.