I will focus my remarks today on the perspective of wholesale payments.1
Tokenisation holds significant promise for enhancing speed and efficiency and could fundamentally change how financial transactions are conducted.
- It brings together different types of money and assets on common programmable infrastructures, often based on distributed ledger technology, or DLT. Tokenisation also introduces novel features such as atomic settlement, programmability, composability and 24/7, round-the-clock execution.
- Atomic settlement is a key feature, as it allows the collapsing of multiple sequential steps into a single “all-or-nothing” execution on a single platform, reducing counterparty and settlement risks.
As tokenisation reshapes the payments and financial landscape, preserving trust in money becomes more critical than ever. The question, therefore, is not necessarily “who will win the competition for the settlement layer” as framed in the title of this session, but rather: how can we harness tokenisation to preserve the principles of trust and stability that underpin the monetary system?
To answer this question, we first need to take a step back and understand what creates trust in the existing system, and what makes money “money”.
Let’s start with “settlement” – what does it mean exactly? Settlement is the last and arguably most critical step in a transaction. For a transaction to be complete, there must be “final settlement”: the irrevocable and unconditional discharge of the obligation in accordance with the terms of the underlying contract (CPMI-IOSCO (2012)). In practical terms, this means that the recipient can rely fully on the money received and use it without having to question its creditworthiness or fear that the transfer will be unwound.
This finality is anchored by settlement in central bank reserves. When an asset is settled in central bank money (typically through a real-time gross settlement (RTGS) system), the recipient receives the safest and most widely accepted asset in an economy – an asset that carries no credit or counterparty risk vis-à-vis a commercial entity. This removes settlement risks and helps prevent a failure at one private institution from propagating through the payment system. This is why settlement finality in central bank money is a key pillar of financial stability.
That being said, trust in money is not just about settlement. It is a hard-won institutional achievement realised through a tiered monetary architecture where the public and private sectors work hand in hand (BIS (2026a)). Central banks sit at the core of the system, underpinning wholesale settlement through their issuance of central bank reserves and instilling trust through their mandates of monetary policy, financial stability and payments oversight. In turn, regulated intermediaries – including both banks and non-bank financial institutions (NBFIs) – act as the critical interface with the real economy and decide where credit best flows.
This tiered monetary architecture gives rise to the fundamental attributes of money. Let me highlight two key features:
- First, money is elastic: public and private money expands and contracts “elastically” to meet the dynamic demands of the real economy.
- Commercial banks issue private money, which is the predominant form of money used to settle claims in the real economy. Banks are commensurately regulated to ensure that their money is prudentially sound.
- NBFIs create other types of assets, including instruments that have low risk and highly liquid characteristics, such as money market fund (MMF) shares or repurchase agreements (repos). These instruments are “money-like”, but not “money”, and cannot be used to settle transactions directly (Maechler (2026)).
- Central banks issue public wholesale money (in the form of risk-free reserves) that commercial banks hold and use to settle these claims against each other.
- Second, money is accepted on a “no question asked” basis: this reflects the principle of the “singleness of money”, whereby one dollar, franc or euro is worth the same as any other, even in times of crisis. Public and regulated private money can therefore be accepted without having to assess the creditworthiness or provenance of the instrument, irrespective of its issuer.
- How does this work? Banks do not typically exchange each other’s customer deposits. Rather, they settle these claims at par using a standardised, risk-free settlement asset – central bank reserves – which is accepted without doubt or concern by any other bank.
- The wholesale settlement layer and corresponding at-par convertibility of private money into central bank money is what sustains singleness of money. It makes private money fungible and enables bank deposits to be used as a trusted means of payment throughout the economy.
These inner workings of the monetary system are not immediately visible in the transactions of everyday life – this is by design. The wholesale settlement layer, together with the institutional setup around it, act as the plumbing that underpins the trust and safety of our payments. They ensure the seamless movement of money at scale throughout the economy with “no questions asked”.
To illustrate this with an analogy: when we turn on a tap, we do not question the water flowing from it if the pipes are working properly. Similarly, a well-functioning system anchored in central bank reserves ensures that any receiver of money does not need to investigate its credibility – or even give it a second thought. That is how we know the plumbing is working. It’s easy to overlook these fundamental pillars when things are going well, but their indispensable nature quickly becomes apparent during times of stress. You only start to notice the plumbing when your water comes out of the tap in sharp bursts, or when it is discoloured.
Now back to the original question – how do we preserve this trust and stability in the tokenised ecosystem? As digital innovations such as tokenisation take off, these underlying principles of trust, public-private collaboration, and final settlement in central bank reserves remains equally, if not more, important.
A promising way forward is to embed tokenisation within the existing architecture anchored in central bank money. For example, tokenised bank deposits can settle atomically (on a 24/7, all-or-nothing basis) in tokenised central bank reserves, on programmable platforms that facilitate regulatory safeguards and access controls. This enables us to unlock the benefits of novel features such as atomic settlement, while ensuring the singleness of money in the tokenised ecosystem with settlement in central bank reserves as the trust anchor.
The ability to bring all legs of a transaction onto a single platform – or atomic settlement – could be particularly transformative for cross-border payments. In cross-border payments, existing frictions multiply across time zones, currencies and regulatory frameworks, and we have seen a decline in serviced corridors and access in recent years. A lot of work remains to be done to understand how the technology can address some of these challenges. For example, atomic settlement may fundamentally change liquidity dynamics, and efficient liquidity management will remain critical in the tokenised world. Greater programmability – and, over time, advances in analytical tools such as artificial intelligence (AI) – could help optimise these mechanisms and allocate liquidity more efficiently, provided that the relevant safeguards are in place. Meanwhile, settlement finality needs to be maintained, and further legal work may be needed to ensure certainty.
The BIS and the wider central banking community are working to transform this vision into reality. One example is the BIS Innovation Hub’s Project Agorá, a public-private collaboration of eight partner central banks and more than 40 financial institutions (BIS (2026b)). The project has already demonstrated the feasibility of atomically settling tokenised commercial bank money across currencies and borders using wholesale central bank money, while preserving each participating central bank’s authority over its own monetary component. This is truly one-of-the-kind pioneering work. Now scale needs to be tested. The project is thereby exploring how to preserve singleness, elasticity and integrity while unlocking the benefits of programmability. It seeks to improve the old while enabling the new.
1 Footnote
| 1 | I would like to thank Daniel Eidan, Jon Frost, Tom Rosewall and Leanne Zhang for their useful contributions to these remarks. |
Question: We are seeing several models develop at once – stablecoins, tokenised deposits, CBDCs, and upgrades to existing payment infrastructure. What problem do you think is most important for the next generation of money and payments to solve? Can stablecoins perform the role of a trusted, money-like settlement asset?
Answer:
The most important problem to solve for the next generation of money and payments is to enhance functionality without weakening trust. The wholesale settlement layer, together with the institutional framework around it, must continue to ensure singleness, settlement finality, elasticity and integrity. Two priorities follow.
First, the financial system must meet demand for faster, more digital and more programmable finance. Tokenisation can reduce reconciliation and manual intervention, enable atomic settlement and support 24/7 execution – but not at the expense of resilience or sound governance. Existing infrastructures should also continue to be upgraded where they can deliver these benefits safely.
Second, we must address persistent frictions in cross-border payments. Despite progress in some areas, access has deteriorated over the past decade, with declining correspondent banking relationships and less well served foreign-exchange corridors (Claessens and Rice (2026)). New solutions need to work across currencies and jurisdictions – not only within the largest markets. – which calls for interoperability, common standards, international cooperation, and public-private collaboration, as in Project Agorá.
On whether stablecoins can serve as a trusted, money-like settlement asset, their underlying rails are crucial. Stablecoins circulate on public, permissionless networks – which offer accessibility but can also generate congestion, fragmentation and weaker network effects (Shin (2026)). Pseudonymous transactions and unhosted wallets raise further integrity concerns. Moreover, because stablecoins remain outside the central bank’s settlement sphere, they cannot currently guarantee singleness and par convertibility across issuers and networks. Their elasticity is constrained by pre-funded issuance, while redemptions depend on the liquidity of their reserve assets.
For stablecoins to perform a more money-like role, they would need high-quality liquid reserves, frictionless redemption at par, credible liquidity arrangements and robust regulatory, supervisory and integrity safeguards. Some limitations can be addressed through design and regulation, while others are more difficult because they are rooted in the structure of public, permissionless networks. Ultimately, the role that stablecoins play will be shaped by design, regulation, technology and user demand. Global coordination will be essential to ensure interoperability and prevent fragmentation and disruptive spillovers.
In tandem, there is also growing experimentation with private, permissioned rails, where some of the aforementioned issues can be mitigated. Here, entry is restricted to approved entities, validation rests with identifiable parties and governance can embed regulatory safeguards and access controls. As such, private, permissioned networks may lend themselves more naturally to use cases in regulated finance.
Question: You have emphasised trust as a foundation of the monetary system, and what creates and sustains that trust as different forms of tokenised money begin to circulate across different platforms and jurisdictions. Are geopolitical shifts an important driver of the tokenisation initiatives we are seeing around the world?
Answer:
Geopolitics could be part of the story, but structural frictions in existing payment systems – particularly in cross-border payments – are also noteworthy drivers. Even before tokenisation took off, access to efficient and affordable cross-border payments had been eroding, with declining correspondent banking relationships and some thinning foreign exchange (FX) corridors, with emerging market and developing economies (EMDEs) bearing the brunt.
This is driving interest in solutions that can scale beyond major currencies and corridors, and improve access, speed and transparency without compromising integrity. Tokenisation can help by reducing reconciliation burdens, manual intervention and other operational frictions, but it is not the only answer. We are also seeing promising developments in, for example, interlinking of instant payments systems across borders as we explored in Project Nexus (BIS (2024)).
Rapid stablecoin adoption presents a further set of macro-financial and policy challenges. Stablecoin reserve composition can influence bank funding, credit provision, monetary policy transmission and government debt markets, while large-scale redemptions could transmit stress to traditional finance (BIS (2026a)). The international dimension adds further complexity, particularly for EMDEs. Foreign-currency stablecoins can accelerate currency substitution, weaken the effectiveness of monetary policy and capital flow management, and create new links between crypto and FX markets (Aldasoro et al (2026a); Aldasoro et al (2026b)) – particularly where domestic savings move abroad to back foreign-currency stablecoins.
For issuers of safe-haven currencies, widespread offshore use of their stablecoins could create oversight and financial integrity challenges. These cross-border effects reinforce the need for international coordination to avoid regulatory arbitrage, fragmentation and disruptive spillovers. Overcoming coordination failures and harnessing network effects requires collective solutions, both across countries and across the public and private sector.
Question: What have you learned about where tokenisation can add the most value in wholesale payments from the BIS on Project Agorá?
Answer:
This project is a major public-private experiment convened by the BIS and the Institute of International Finance (IIF). It brings together participating central banks and regulated financial institutions to examine whether tokenisation and programmability can improve wholesale cross-border payments while preserving the two-tier monetary system. At the heart of the project is a clear hypothesis: applying tokenisation and programmability to the correspondent banking model could reduce some of the operational complexity, costs and risks associated with cross-border payments.
Agorá is not seeking to replace correspondent banking. Instead, it explores how its established institutional foundations could be enhanced through a shared programmable platform. The project brings together wholesale central bank money and commercial bank money represented in tokenised form. It is testing whether this arrangement can support programmable workflows and atomic settlement across currencies, while preserving the respective roles of central banks and regulated financial institutions. Programmability makes it possible to embed selected workflow logic, compliance-related controls and payment conditions into transaction processes. The project is assessing whether this could reduce manual interventions, reconciliation requirements and processing delays.
One important area of work is monetary sovereignty. The architecture is designed to preserve each participating central bank’s authority over its own monetary component, including the applicable access and transfer conditions. The prototype is also testing atomic settlement across currencies and jurisdictions. By making linked transfers conditional on one another, this approach could reduce principal risk, although wider liquidity, operational, legal and compliance considerations would remain.
The project has now reached an important stage, with the prototype being used to test the proposed business processes, functionality and architecture. This testing is intended to generate practical evidence on what works, what limitations remain and what would be required for any potential next phase. It is therefore too early to draw final conclusions. However, the project is already providing valuable insights into the technical, operational, legal and governance questions that arise when tokenisation is applied to wholesale cross-border payments.
Question: The likely destination is a multi-rail, multi-model system, with different forms of money and payment infrastructure operating alongside one another. And while that’s easy to say, it’s much harder to operate. What is the biggest challenge that still needs to be solved for that system to work effectively?
Answer:
In a multi-rail, multi-model world, a key challenge is interoperability. Take tokenised deposits as an example – they work well within the confines of a single bank or consortium network, but beyond that they become “walled gardens”. For example, a tokenised deposit issued by Bank A can indeed circulate efficiently among the clients of Bank A. But without interoperability, it cannot transcend the bank’s “KYC boundary” and be transferred to a client of another bank, Bank B (BIS (2025)). Without a common, trusted settlement asset on programmable rails, tokens cannot circulate seamlessly across institutions without entailing new credit exposures.
In the traditional financial system, banks resolve this by settling interbank claims with finality in central bank reserves – the safest settlement asset accepted on a no-questions-asked basis. Wholesale central bank money can play the same role in the tokenised ecosystem. Anchoring settlement in tokenised reserves allows tokenised deposits from different banks to become fungible. They can settle at par with finality, preserving singleness, elasticity and integrity.
The interoperability challenge extends beyond tokenised deposits. More broadly, as private permissioned and public permissionless DLT networks grow, a key question is how to bridge these worlds. We also need to consider how tokenised ecosystems will interface with today’s traditional rails. Connecting fundamentally different trust architectures and avoiding fragmentation will require public‑private collaboration, common standards and learning by building, as we are doing at the BIS through projects such as Agorá.
This is not just a technical task, but also a governance one. Clear roles and accountability, aligned access and compliance rules, and internationally coordinated approaches will be essential to unlock network effects (domestically and cross-borders) while preserving trust and avoiding fragmentation.
Question: Ten years out, what do you expect to settle the majority of cross-border value: correspondent banking on better rails, tokenised deposits on a shared platform, central bank digital currencies, or stablecoins?
Answer:
I believe it will be on more efficient rails, and digital innovation and tokenisation are already showing that promise. But the time‑tested foundations that underpin trust and safety in money – regardless of what form that money takes – have not changed: central bank money at the core, and a tiered system where central banks, regulators and regulated institutions work together to uphold trust, resilience and integrity in the financial system.
That is why we at the BIS, along with the broader central banking community, are working together with the private sector in projects like Agorá to explore how we can achieve such a future – to ensure that the future monetary system is firmly anchored in trust and stability, while harnessing new technology, for the public good.
References
Aldasoro, I, P Beltran and F Grinberg (2026a): “Stablecoin flows and foreign exchange parity deviations in segmented markets”, BIS Working Papers, no 1340.
Aldasoro, I, J Frost and H Ito (2026b): “The impact of stablecoins on the international monetary and financial system”, BIS Papers, no 170.
Bank for International Settlements (BIS) (2024): Project Nexus: Enabling instant cross-border payments.
——— (2025): “The next-generation monetary and financial system”, Annual Economic Report, Chapter III.
——— (2026a): "Anchoring trust in money: innovation beyond stablecoins", Annual Economic Report, Chapter III.
——— (2026b): Project Agorá: a shared programmable platform for wholesale cross border payments.
Claessens, S and T Rice (2026): “Cross-border payment technologies: innovations and challenges”, BIS Papers, no 167.
Committee on Payments and Market Infrastructures and Board of the International Organization of Securities Commissions (CPMI-IOSCO) (2012): Principles for financial market infrastructures.
Maechler, A (2026): “What makes money, money? Ensuring trust in the next generation financial ecosystem”, remarks at the Point Zero Forum, Zurich, 24 June.
Shin, H S (2026): “Tokenomics and blockchain fragmentation”, BIS Working Papers, no 1335.
