Central counterparties would be required to demonstrate that tokenized collateral meets liquidity and risk tests under proposed Bank of England guidance.
The Bank of England has launched a consultation on how a central counterparty (CCP) can accept digital versions of eligible collateral, saying existing rules allow this if assets meet clearing standards.
The draft supervision opinion would clarify what CCPs must address in applications under the current approval process. It includes already accepted securities and types that fall under the proposed UK CCP Rulebook but are not used. The declaration would not create any new regulatory obligations.
The BoE said tokenized collateral can be valued, transferred and liquidated even under stressed conditions. Faster movement between jurisdictions could help companies meet margin calls, it said.
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