The Swiss National Bank is examining the best way that financial assets can be digitally tokenised as a way of making payments more secure and efficient, Chairman Thomas Jordan said on Monday.

Jordan said central banks needed to decide how best to engage in the developments which advocates say will speed up and make payments cheaper.

Tokenisation means the digital representation of claims on financial assets on a programmable platform which typically relies on distributed ledger technology.

"Central banks....can take a wait-and-see stance and only act if tokenisation is adopted at scale," Jordan told an event held in Basel.

"Alternatively, they can push ahead independently of market adoption. Or they can proceed stepwise to identify the optimal solutions for settling tokenised asset transactions together with market participants through experiments."

The SNB favours the third option, Jordan said as it examines the risks and benefits.

One project, called Helvetia III, allows tokenised central bank money to be used to settle transactions and has already been used in four bond issuances by Swiss local government.

"Through our Helvetia III pilot, we are contributing to the private sector's exploration of how tokenisation can improve the current financial system," Jordan said.

"The world's first issuance of wholesale CBDC (central bank digital currency) on a regulated third-party platform underscores our commitment to facilitating technical progress while acting prudently and responsibly."

(Reporting by John Revill)