Speech

Thank you for the opportunity to participate in today’s policy panel on Central Banking and the Future of Payments. The global payment system is being reshaped in ways few could have imagined a decade ago. Technology continues to advance at a rapid pace. New forms of digital money are emerging. And users, whether households or firms, increasingly expect payments to be faster, cheaper, and more transparent. These forces are pushing us towards a new architecture of payments with increasing interconnectedness and complexity.

What we are witnessing is not a series of isolated innovations, but a structural transformation in the way money moves across economies. Understanding this transition, and guiding it responsibly, is essential to ensure that payments continue to be safe and inclusive as well as efficient.

One of the clearest signals of this transformation is the widespread adoption of fast payment systems. More than 100 countries now operate such systems, clearing retail payments in seconds. The magnitude and speed of the shift towards cashless payments is particularly striking in economies such as Brazil, India, and Sweden. Increasingly, these fast payment systems are also linked with other systems across borders and the opportunities become even more powerful. The experiences of Singapore, Thailand, and India, illustrate that when “systems speak to each other,” costs can fall sharply, speed can improve, and users can gain access to more transparent and convenient transactions.

Running in parallel, we are seeing central banks exploring the future of public money. More than 130 countries are evaluating central bank digital currencies (CBDCs). Retail CBDCs have been introduced in a few jurisdictions with gradual uptake, offering early lessons on design and implementation. At the wholesale level, interest continues to grow in both advanced and emerging economies, driven by the potential for efficiency gains in settlement. Wholesale CBDC is seen as a foundation for tokenization of deposits and assets more broadly. These efforts by central banks reflect a key question for monetary authorities: how should central bank money evolve in an increasingly digital financial system?

Innovation is also reshaping wholesale transactions settlement and liquidity management more broadly. There is growing interest in asset platforms that combine traditional commercial bank money, CBDCs, and tokenized assets in integrated settlement environments. Although these platforms are at an early stage, they illustrate how markets are exploring interoperability and searching for improved liquidity and settlement efficiency in multi-asset transactions. Over time, stablecoins or crypto assets may interact with these platforms as well, which raises important policy considerations for the regulatory and prudential perimeter.

Private forms of digital money are also evolving quickly. Stablecoins, in particular, have expanded rapidly, with their market capitalization approaching 300 billion U.S. dollars. They are deeply embedded in crypto markets and increasingly used in cross-border transactions, including remittances. The high market concentration among a few issuers highlights the need for robust governance, strong risk management, and consistent regulatory frameworks.

Across all these developments, a pattern is visible: the modernization of payments increasingly requires coordination between public and private sectors. Initiatives such as Nexus, Agora, and Ensemble demonstrate practical models for interlinking fast payment systems, exploring tokenized settlement and testing multi-currency ledgers. These collaborations highlight an important recognition that neither the public sector nor the private sector can address modern payment challenges on their own.

These shifts create meaningful opportunities. Fast payment systems, when reliable and low cost, can support financial inclusion at scale. India’s UPI, which now processes close to 20 billion transactions in a single month, shows how consumer behavior changes when payments become universally accessible. At the cross-border level, linking domestic systems has potential to reduce some of the most persistent frictions in global finance. Globally, sending a remittance of less than 200 U.S. dollars still costs more than six percent on average [1]—more than twice the United Nations’ Sustainable Development Goal target. Where systems have been linked, we already see measurable reductions in cost and improvements in speed and transparency. Ultimately, the opportunity extends beyond individual systems: enhancing interoperability across payment instruments (including cash, private digital money, and CBDCs) and enabling seamless exchange with tokenized assets could unlock new possibilities for consumers and investors alike. The Singapore–Thailand corridor offers an example where average costs, settlement times, and transaction sizes all improved once systems were connected.

Despite these opportunities, there are new vulnerabilities to accompany them. Nonbank financial institutions including Big Tech firms, digital wallet providers, and fintech platforms now play a central role in payments. They control user interfaces, manage transaction flows and hold valuable data yet often operate outside traditional prudential frameworks. This can create situations where a loss of confidence in a dominant wallet provider or platform leads to rapid shifts of balances at a scale previously unseen.

Technology brings new efficiencies but also new risks. now becomes embedded into payment routing, fraud detection, and IT systems, new concerns emerge. A flawed software update or unintended interaction between models could propagate rapidly through interconnected financial market infrastructures. Meanwhile, AI enables highly targeted and convincing scams, complicating consumer-protection efforts. Managing these risks requires deeper supervisory expertise and continuous adaptation of oversight frameworks.

These developments naturally expand the responsibilities of central banks and other authorities. One dimension concerns financial stability. Risks increasingly originate outside the regulated financial system. Authorities are therefore strengthening oversight of nonbank payment entities, introducing liquidity expectations, capital buffers, stress testing, and enhanced concentration risk assessments. Some jurisdictions, such as the European Union, are allowing nonbank payment service providers to access payment systems while at the same time enhancing the consumer protection frameworks for payment service providers, such as the revised Payment Services Directive and Regulation.

The second dimension is technological capability. Central banks must understand digital money, blockchain-based assets, and AI-driven processes not simply to evaluate CBDC issuance and design, but also to assess emerging risks in the broader payment ecosystem. These competencies are now essential to fulfill core mandates.

The third dimension involves the development of public infrastructure. Fast payment systems, centralized know-your-customer (KYC) utilities, and fraud-monitoring frameworks are increasingly viewed as public goods. India’s centralized KYC registry and Brazil’s PIX-level fraud monitoring are examples of how well-designed public infrastructure can support private-sector innovation while maintaining trust and safety.

Improving cross-border payments remains a central priority at a global level. Fragmented payment systems can undermine economic activity and financial stability. Payment corridors typically operate under own rules, formats, foreign exchange practices, and access conditions, leading to important inefficiencies. The most practical path to improvement is interoperability. When countries upgrade domestic payment rails, harmonize basic requirements, open access to well-regulated and supervised payment providers, and establish simpler pathways for cross-border settlement, costs fall, speed increases, and transparency improves. [2] The IMF, in partnership with the World Bank, is prioritizing regions where frictions are highest, including Sub-Saharan Africa, to help authorities diagnose bottlenecks and implement reforms with measurable gains.

As digital money evolves, so too must regulation. A consistent, risk-based, and technology-neutral approach is essential. Similar risks should be addressed by similar rules, regardless of technology used. Regulatory implementation can proceed in phases: beginning with risk assessments and data collection; establishing baseline protections; and then expanding frameworks as markets develop. Strong governance, clear roles and responsibilities, financial integrity safeguards, and well-regulated participants are critical elements of a sound digital money ecosystem. The IMF supports countries across these dimensions, whether in exploring CBDCs through our CBDC Virtual Handbook or assessing crypto-asset regulation through technical assistance, and the Financial Sector Assessment Program.

International coordination is also increasingly important, and the IMF works closely with the Financial Stability Board, the Bank for International Settlements, the International Organization of Securities Commissions, and the Financial Action Task Force.

Many of the market dynamics we observe today are not entirely new. Traditional payment markets have long faced challenges arising from network effects and concentration, which led many jurisdictions to introduce public interventions such as fee caps on card networks, interoperability mandates, public fast payment systems like PIX and UPI, and, in some cases, CBDCs. As digital payment markets evolve, we are seeing similar patterns emerge in stablecoins, Big Tech wallets, and tokenized platforms. These new ecosystems could therefore require comparable policy tools to promote competition, ensure fair access, and mitigate systemic risks. No single measure will be sufficient, but a balanced mix of competition policy, interoperability frameworks, and strong public infrastructure can help support innovation while safeguarding stability.

A recurring challenge for authorities is determining the right moment to intervene. Innovation typically moves faster than regulation and acting too early can hinder useful experimentation whereas acting too late can allow vulnerabilities to accumulate. The objective is not to anticipate every development, but to ensure regulatory frameworks remain adaptable so that emerging risks can be addressed in a timely and proportionate way. This approach helps maintain stability while allowing the best of innovation to take hold.

As we look ahead, it is clear that the transformation of the payment system is far from complete. We are entering a period where choices about payment systems will shape broader financial stability and inclusion outcomes. Distributed ledgers, tokenization, and AI are expanding what is possible. At the same time, new risks are emerging often outside traditional regulatory boundaries. Achieving an efficient, inclusive, and stable monetary system will require a balanced approach that combines market innovation, public infrastructure, effective regulation, and strong international cooperation. The IMF remains committed to supporting this transition, both analytically and operationally, and through deep engagement with our member countries.

[1] The Q1 2025 average stood at 6.49 percent according to World Bank’s RPW (Remittance Prices Worldwide) database.

[2] IMF and World Bank Approach to Cross-Border Payments Technical Assistance