BIS and New York Fed Launch Project Pine Smart Contract Tool Test to Explore Tokenized Monetary Policy Applications

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

According to a report released by BIS on May 15, the research team developed a prototype of a "universal customizable tokenized monetary policy toolkit" and verified its flexibility in hypothetical scenarios. The results showed that central banks could instantly adjust policy tool parameters, such as collateral standards and interest rates, and complete the swap of liquid and illiquid collateral within 10 minutes.

BIS emphasized that if the tokenization of money and securities is widely adopted, smart contracts will become the core technology for implementing monetary policy. This framework allows central banks to "instantly" deploy new facilities, such as adjusting reserve interest rates or providing liquidity support, enabling rapid response in crises like collateral value drops. The report states that this speed and flexibility offer central banks new ideas for dealing with "unexpected events and rapidly evolving risks."

However, the report also points out the limitations of the current financial infrastructure. Most traditional systems are not yet compatible with advanced use cases like smart contracts, and central banks may face challenges in advancing technological integration. Project Pine's tests used the Ethereum ERC-20 token standard, combined with another set of "access control" standards to ensure compliance.

In recent years, financial institutions have accelerated their deployment of tokenization technology. At the Consensus 2025 conference, Joseph Spiro, Digital Asset Product Director at the Depository Trust & Clearing Corporation (DTCC), stated that stablecoins are the "ideal" tool for real-time collateral management in transactions such as loans or derivatives. The collaboration between BIS and central banks further confirms the trend of exploring blockchain technology in the traditional financial sector.