BIS assesses central bank policy options to preserve trust as payment systems evolve

The Bank for International Settlements’ Committee on Payments and Market Infrastructures (CPMI) has published a report assessing how payment innovation changes risks and central banks’ policy choices. Building on a framework developed by the CPMI’s predecessor in 2003, the analysis reaffirms that central bank money should support convertibility at par and serve as the settlement asset in systemically important payment systems and other financial market infrastructures where practical and available. Private means of payment play a complementary role in innovation and competition. Tokenization can lower entry barriers but complicate accountability for operational and cyber risks when issuance, recording and transfer functions are split across entities. Gross settlement and prefunding can increase liquidity needs, while poorly connected platforms can fragment liquidity. Stablecoin holders without direct redemption rights may depend on secondary markets, exposing conversion values to market liquidity and price fluctuations. Policy options include differentiated access to central bank accounts and services, balancing competition and reduced dependence on bank intermediaries against risks introduced by new participants. Infrastructure choices range from upgrading existing systems to developing new platforms, including arrangements supporting settlement of tokenized assets in central bank money. Oversight considerations include whether stablecoin and tokenized arrangements perform infrastructure functions and are systemically important. Depending on their authority, central banks may oversee arrangements directly, require regulated intermediaries to manage risks arising from their use, or combine both approaches. Central banks can also convene industry to resolve coordination failures and promote interoperability and common standards. These tools interact, requiring policy choices to be assessed together rather than in isolation.