Feasibility of Smart Contracts in Monetary Policy Explored by New York Fed and BIS

According to PANews, the New York Federal Reserve and the Bank for International Settlements (BIS) have jointly released a research report titled 'Project Pine,' which examines the feasibility of using smart contracts in tokenized financial markets for implementing monetary policy. The report reveals that the New York Fed Innovation Center and BIS Innovation Hub have collaboratively developed a prototype toolkit based on smart contracts for central bank monetary policy execution. This toolkit supports operations such as interest rate payments, asset purchases, and collateral management, and has been tested across ten historical simulation scenarios, including market turbulence and liquidity constraints. The report highlights the capability of smart contracts to rapidly deploy and adjust monetary policy tools, offering flexibility and efficiency for future central bank policy execution in tokenized financial systems. However, it also emphasizes the need to address interoperability, data standards, and potential operational risks.