The Bank for International Settlements and the New York Fed launch a beta of the Project Pine smart contract tool to explore tokenized monetary policy applications

According to Cointelegraph, the Bank for International Settlements (BIS) and the Federal Reserve Bank of New York's Innovation Center are jointly conducting research to test a tokenized monetary policy toolkit based on smart contracts. The experiment, called Project Pine, aims to explore how blockchain technology can help central banks achieve rapid policy responses in the tokenized financial system of the future.

According to a report published by BIS on May 15, the research team developed a prototype of a "universal customizable tokenized monetary policy toolkit" and validated its flexibility in a hypothetical scenario. The results show that the central bank was able to adjust the parameters of policy tools, such as collateral standards and interest rates, on the fly, and complete the swap of liquid and illiquid collateral within 10 minutes.

BIS emphasizes that if the tokenization of currencies and securities is widely adopted, smart contracts will become the core technology for the execution of monetary policy. The framework allows central banks to deploy new facilities "on the fly", such as adjusting reserve rates or providing liquidity support, to respond quickly to crises such as falling collateral values. This speed and flexibility provides new ideas for central banks to respond to "unexpected and rapidly evolving risks," the report said.

However, the report also points to the limitations of the current financial infrastructure. Most legacy systems are not yet compatible with advanced use cases such as smart contracts, and central banks may face challenges in moving forward with technology integration. Project Pine's testing uses the Ethereum ERC-20 token standard, combined with another set of "access control" standards to ensure compliance.

In recent years, financial institutions have accelerated the deployment of tokenization technology. At the Consensus 2025 conference, Joseph Spiro, director of digital asset products at the Depository Trust & Clearing Corporation (DTCC), said that stablecoins are an "ideal" tool for real-time collateral management in transactions such as loans or derivatives. The cooperation between BIS and the central bank further confirms the trend of exploring blockchain technology in the traditional financial field.

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