BIS and New York Fed launch Project Pine smart contract tool testing to explore tokenized monetary policy applications

According to Cointelegraph, the Bank for International Settlements (BIS) and the New York Federal Reserve Innovation Center jointly conducted research, testing a tokenized monetary policy toolkit based on smart contracts. The 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 validated 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 exchange of liquid and non-liquid collateral within 10 minutes. BIS emphasized that if monetary and securities tokenization is widely adopted, smart contracts will become the core technology for executing monetary policy. The framework allows central banks to "instantly" deploy new facilities, such as adjusting reserve interest rates or providing liquidity support, thereby quickly responding to crises like collateral value declines. The report noted that this speed and flexibility provide new insights for central banks to address "sudden events and rapidly evolving risks." However, the report also pointed out the limitations of 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. The Project Pine test used the Ethereum ERC-20 token standard and combined another "access control" standard to ensure compliance. In recent years, financial institutions have accelerated their deployment of tokenization technology. At the Consensus 2025 conference, Joseph Spiro, Digital Asset Products Director at the Depository Trust & Clearing Corporation (DTCC), stated that stablecoins are an "ideal" tool for real-time collateral management in transactions such as loans or derivatives. This collaboration between BIS and central banks further confirms the trend of exploring blockchain technology in traditional finance.