Central banks are exploring smart contracts for tokenized monetary policy through Project Pine, backed by the Federal Reserve Bank of New York and the Bank for International Settlements (BIS). This project aims to integrate blockchain technology into traditional finance. A prototype toolkit was tested, showcasing its speed and flexibility in a financial system where central banks could rapidly adjust parameters during hypothetical scenarios. The BIS report highlighted that the smart contracts could enable central banks to deploy financial tools and change interest rates instantly, particularly useful in response to unpredictable events. Despite the potential for improved monetary policy execution, the report cautioned about existing infrastructure limitations, indicating that current financial systems are not equipped for these advanced functionalities.

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