Technological innovation, changing user demand and the emergence of new types of entities and infrastructures are transforming payment systems. These developments may have significant implications for payment system safety and efficiency as well as for trust in money.
Against this backdrop, this report by the Bank for International Settlements (BIS) Committee on Payments and Market Infrastructures (CPMI) examines the implications of these developments for central banks and for the role of central bank money.
The report discusses the foundational features of payment systems that are expected to remain stable over time. Payment systems continue to be shaped by network effects, the dynamics between concentration and fragmentation and the need for trust in money as their cornerstone. A safe and efficient payment system combines central bank money with private means of payment and settlement. Central bank money provides the safest and most liquid settlement asset for systemically important systems and supports convertibility at par among different means of payment. Private sector entities play a complementary role by driving innovation, fostering competition, enhancing efficiency and expanding access to payment services.
The report examines the implications of the growing diversity and complexity of payment arrangements, including fast payment systems, non-bank payment service providers, tokenised deposits, stablecoins and programmable platforms. These developments may create opportunities for enhanced efficiency, competition and innovation. They may also generate new interdependencies and may introduce or amplify risks across the system, including credit, liquidity, operational and cyber risks.
The report examines key policy tools and sets out considerations for central banks in their roles as issuers of money, payment system operators and overseers, and catalysts for change. As these tools interact with each other and central bank actions in one area may affect outcomes in others, central bank may consider their policy choices holistically. Through sustained adaptability and robust international cooperation, central banks can support payment systems as a reliable foundation for economic activity and growth in an increasingly digital and interconnected payments ecosystem.