Do Bank Deposit Tokens Create New Money—or Just Represent Existing Deposits?

Digital finance often gets discussed in terms of technology. I think we should also ask what financial claim a digital token represents. A bank deposit is already commercial bank money, created when a bank lends and credits a borrower’s account. Turning that deposit into a token may change how it is represented and transferred, but does it create more money? The Central Bank of Nigeria’s November 5, 2026, regulations define Deposit Money Tokens as tokens issued by CBN-licensed banks that represent a direct claim on the bank and correspond to an existing naira deposit liability. The regulations say these tokens do not create a separate form of money or a new deposit-taking instrument. For example, if a bank creates a ₦1 million deposit when it issues a loan, a token representing that same deposit does not add another ₦1 million. The underlying claim remains the same; only its digital representation changes. I think this distinction matters as financial systems become more digital. What determines whether a digital instrument represents an existing liability or creates a new one? And should we focus more on the technology moving money or the balance-sheet structure behind it?

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