Analysis of Countries’ Maturity for a Financial Transition Towards Tokenization

Abstract

A silent revolution is taking place in the world of finance. Approved by regulators, blockchain technology is gradually becoming established in the issuance of new “tokenized” financial securities, which allow financiers to make significant progress in overcoming the constraints imposed by transaction cost theory (TCT). In this era of financial transition towards the tokenization process, our research aims to examine the state of readiness for this digital transformation through the development of an index (Readiness Indicator Function, RIF), which will be applied to the analysis of seven countries, namely Morocco, Tunisia, Egypt, Spain, Portugal, South Africa and Nigeria. Using Principal Component Analysis (PCA), we examine 16 crucial economic and technological factors to provide a comprehensive framework to assess the capacity of each country to integrate tokenization into its markets and financial institutions. Despite low Gross Domestic Product (GDP) per capita, analysis of RIF criteria data shows that the sample countries have potential for implementing digital financial transformation through tokenization. This study provides policy makers, economic actors and financial institutions with grounded insights into critical areas for strategic investments and regulatory reform to implement tokenization.