skip to Main Content
axytos News

Tokenisation of assets and the role of the banks (1/2)

A conversation with Prof. Dr Hans-Gert Penzel about the future of property. Prof. Dr Hans-Gert Penzel, Chairman of the Advisory Board of axytos, teaches and researches at the University of Regensburg. The recognised financial expert was, among other things, Director General and CIO of the European Central Bank from 2004 to 2010. 

We talked to him about what is behind tokenisation and what potential benefits can arise from it in practice. We also wanted to know what the state of development is and what can be expected for the future of embedded finance.

In Part 1, you can read why smart contracts are an indispensable part of the entire tokenisation chain and where the potential benefits of this financial technology lie.

Prof. Penzel, what is behind this tokenisation and what does it have to do with blockchain, crypto assets and smart contracts?

To start with an image: This 10 euro note from my wallet is our analogue currency with which I can buy a good or service – and everyone accepts it. The digital version would be a picture of that note on my smartphone that I can simply forward to pay for something with it. Tokens are such digital objects that represent value in their own right. They can mirror physical objects, such as real estate or a machine, but they can also exist in a purely digital form, such as cryptocurrencies, for example the USD Coin, promissory notes, securities or digital works of art. Tokens can be acquired, held and also passed on, possibly also on marketplaces or exchanges. They can be used to pay, speculate, hold value or enable use.

The important point is that they are accepted by the recipient without the need for explicit reassurance from a central office. With a normal bank transfer, I first have to wait to see whether the amount is actually booked to my account. With tokens, this works immediately.

Prof. Dr Hans-Gert Penzel: “Tokens are already a natural part of the digital world. They allow the end-to-end digitisation of processes without media breaks and can therefore be used as a store of value almost everywhere.”

Ausgabe 39 - Tokenisierung Interview Prof. Penzel Teil 1

But we don’t have a contract yet…

Exactly. And this is where the smart contract comes into play, an indispensable part of the entire chain. Because this refers to the contractual agreements between buyer and seller that are anchored in the program code and are automatically executed. These can be implemented in the token itself or in the software above it. The cryptocurrency Etherum, for example, allows the implementation of smart contracts in the token itself, whereas Bitcoin does not. All the information of these building blocks of decentralised finance is stored in databases based on the so-called distributed ledger technology with distributed directories and is transparent for all actors, as well as being reliably replicated and synchronised.

But where does the potential benefit that the tokens are supposed to generate come from?

Tokens are already a natural part of the digital world. They allow the continuous digitisation of processes without media breaks and can therefore be used almost everywhere as a store of value; in the metaverse, they are indispensable. In quantitative considerations, they are presented as economically highly attractive because processes become cheaper, faster and more transparent. However, there is still a lot of marketing involved with sometimes exaggerated statements, as can be seen in the example of a typical securities process, which I will explain in detail in my presentation. From the allocation of the token according to the taxonomy and the clarification of the sourcing, to the structuring and preparation of the prospectus, to the further issuing activities, the individual steps are so complex and diverse that, from my point of view, only a maximum of 35 percent remains of the 99 percent faster processing promised in the advertising.

About the interview partner: Prof. Dr. Hans-Gert Penzel, member of the atriga Advisory Board, teaches and conducts research at the University of Regensburg. From 2004 to 2010, Penzel was Director General and CIO of the European Central Bank, from 2010 to 2019 Managing Partner of ibi research at the University of Regensburg.

In part 2 of the interview, you can read, among other things, about the role of regulation at EU level and what impact tokenisation will have on banks.

We are looking forward to hearing from you.


Subscribe to axytos News now and always be the first to know.

Back To Top
axytos GmbH
Pittlerstr. 47
63225 Langen
+49 (0)6103 599 84 00
+49 (0)6103 599 84 10