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Original article: Los tres caminos del dinero tokenizado: el mapa de Rod Garratt para la banca y el BCCh

In his presentation on The Three Paths of Tokenized Money: Rod Garratt’s Roadmap for Banking and the Central Bank of Chile, the UC Santa Barbara academic detailed the digital payment models (institutional, without a settlement asset, and direct), warned about the «redemption problem» of stablecoins, and highlighted Chile’s regulatory advantage over the U.S.

Santiago, August 5, 2026. Far from being a passing trend, the tokenization of money is progressing along three parallel tracks that will define the financial architecture of the next decade. This was asserted by economist Rod Garratt, a professor at the University of California, Santa Barbara, during his keynote address at the Payment Systems seminar organized by the Central Bank of Chile (BCCh).

With a presentation enriched with history, comparative data, and sharp analyses of recent failures (FTX and Silicon Valley Bank), Garratt not only updated the global debate but also focused on a crucial point for the local industry: Chile already possesses a legal framework that few countries have to regulate stablecoins.

Three Models, One Common Goal

Garratt structured his talk around the fundamental question of how value is transferred in digital environments. He recalled that while cash is still prevalent (31% of transactions in Chile and 16% in the U.S.), the vast majority of payments occur through the movement of bank liabilities. In this context, he identified three major approaches to tokenized payments:

1. The institutional use of settlement assets (Wholesale CBDC): Here, he placed the legacy of Project Jasper (Canada), which laid the groundwork for central banks to issue digital representations of money on DLT platforms. Garratt reviewed the evolution toward projects like Helvetia (Switzerland), which is already operational, and the ambitious Project Agorá from the BIS, which seeks a «unified ledger» for settling tokenized deposits in central bank money at a multilateral level.
2. The non-use of central settlement assets (Stablecoins): In this model, payments are completed by transferring a private liability (from an external issuer) without direct intervention from the central bank in the settlement process. Garratt was emphatic in labeling this model as the most problematic.
3. Direct consumer usage (Retail CBDC): The third path, still being explored globally, where citizens would have direct access to the central bank’s digital money.

The «Redemption Problem» That Fractures the System

The most technical and revealing moment of the presentation revolved around the «singularity of money» (singleness of money). Garratt explained that stablecoins (like USDC or USDT) are not negotiable instruments (like a check) but suffer from a «structural redemption problem.»

According to the academic’s slides, ordinary holders of these coins cannot present them directly to the issuer to reclaim their value in dollars. They must do so in secondary markets (where prices fluctuate, especially during stress periods) or through intermediaries with hidden costs and timelines of up to 7 days.

«A functional payment instrument requires certainty, immediacy, and parity conversion for all holders,» Garratt stated, highlighting that the business of issuers like Tether (with $157 billion in assets and only 150 employees) generates extraordinary profits but leaves a legal gap in protecting the end user.

A Nod to Chile: An Unexpected Regulatory Advantage

Amid the comparative analysis, Garratt emphasized a fact that resonated strongly with attendees: Chile is several steps ahead of the United States on this front.

While in the United States, stablecoins do not fit into Articles 3 and 4 of the Uniform Commercial Code (UCC), forcing banks to treat them as digital assets in custody (with capital charges and complex operational requirements), the Chilean reality is different.

The academic explicitly showed slide 44 of his presentation, which states that the Fintech Law and reforms to the Central Bank of Chile explicitly classify stablecoins backed by fiat currency as a recognized means of payment, granting the issuing authority the direct power to draft tailored regulations for their operation.

«Chile has a legal framework that allows for the creation of customized rules for these instruments, something that is still in limbo in the United States,» Garratt emphasized, suggesting that the country could become a regulatory laboratory for tokenization.

The Future: Traditional Banks vs. the Crypto Ecosystem

When asked how the market will evolve, Garratt proposed two scenarios. On one hand, a consortium of major U.S. banks (JPMorgan, Bank of America, Citi, among others) will launch a network of tokenized deposits through The Clearing House in 2027, seeking to compete with traditional stablecoins by offering interest and FDIC coverage.

On the other hand, he warned that the rise of stablecoins as a cross-border payment tool (especially those linked to the dollar) is sidelining local banking systems, as value reaches self-custodied wallets without local authorities seeing the flow.

The ideal solution, Garratt proposed, is for local banks to «capture» incoming stablecoins, redeem them, and credit the client in local currency while applying AML/KYC controls and charging a currency differential. A model that, under the new Chilean law, could be implemented more swiftly than in other regions.

To close, Garratt referred to history: in 1913, the Federal Reserve had to standardize the compensation of checks in the U.S., eliminating delays of 5.3 days and arbitrary charges between banks. Today, the world of tokenized payments faces a similar challenge: standardizing settlement, resolving the redemption problem, and deciding if the future will consist of a set of private «silos», a unified ledger (like Agorá), or a public network with privacy.

The message to the Central Bank of Chile was clear: the «no swimming» sign for digital assets has been removed globally, but it is time to build infrastructure, establish clear rules, and, above all, ensure that the «singularity of money» is not lost in the technological tide.

By Bruno Sommer

La entrada The Three Paths of Tokenized Money: Rod Garratt’s Roadmap for Banking and the Central Bank of Chile se publicó primero en El Ciudadano.