Capital Markets / Liquidity

Liquidity Optimization Through Tokenization

Intraday liquidity is the cash a bank can use or borrow during the business day to make payments. Tokenized repo, collateral and deposits let banks raise it and return it within hours.

Summary

Intraday liquidity is the money a bank has available, or can borrow, during the business day to make payments and settle trades. It matters because large-value payment systems settle gross and in real time, so a bank needs the cash when each payment goes out, not at the end of the day. Tokenization changes where that cash comes from and how quickly it can go back.

How it works

Supervisors track intraday liquidity directly. In April 2013 the Basel Committee published seven quantitative monitoring tools, developed with the CPSS, so supervisors can see how banks manage intraday liquidity risk and whether they meet payment and settlement obligations on time. Banks hold buffers of central bank reserves and high-quality securities to stay within those limits. A buffer sized for the busiest hour of the day sits unused for the rest of it.

The usual toolkit has three parts: reserves, intraday credit from the central bank against collateral, and holding back outgoing payments until incoming funds arrive. Each has a cost. Reserves and pledged collateral are balance sheet that could earn more elsewhere, and delayed payments slow everyone else down. The ECB defines intraday credit as credit extended and reimbursed within a single business day, and in private markets that tenor barely exists. Overnight is the shortest standard repo, so a bank that needs cash from 10:00 to 14:00 borrows for a full day or does not borrow at all.

Tokenized repo makes the shorter tenor workable. Broadridge's Distributed Ledger Repo (DLR) creates digital representations of securities and moves them against cash in one synchronized transaction, so a repo can open and close on the same day. DLR supports intraday repo and collateral pledges. It processed an average of $351 billion a day in August 2026, $7.4 trillion for the month, and in September 2026 Broadridge added G7 securities to extend it to cross-border repo.

J.P. Morgan runs a similar model on Kinexys Digital Assets. Its Digital Financing application exchanges cash for tokenized collateral through smart contracts and settles intraday repo trades in near real time. Borrowers get secured intraday liquidity, and lenders get somewhere to place cash for hours.

Collateral is the other half of the problem. In October 2023, BlackRock tokenized shares in one of its money market funds on J.P. Morgan's Tokenized Collateral Network and transferred them to Barclays as collateral for an OTC derivatives trade. Tokenization took minutes and the transfer was near instantaneous. For a firm facing an intraday margin call, that means a yield-bearing fund position can meet the call directly instead of being redeemed into cash first.

Deposit tokens handle the cash leg. A bank deposit issued as a token can move between institutions on the same ledger outside RTGS hours, which helps a bank whose payment peak falls after its home system closes. There are limits. Tokenized cash only helps when the counterparty is on the same network, and each new ledger is another pool where liquidity can get stuck. Intraday liquidity improves when the asset and the cash share a ledger. Tokenizing both on separate ledgers does not help.

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