De Nederlandsche Bank published remarks by Olaf Sleijpen at a CPMI-CGFS workshop in Tokyo, setting out how the modernization of payment systems is reshaping cross-border payments and creating both efficiency gains and new financial stability vulnerabilities. The presentation highlighted five developments driving modernization: interlinking fast payment systems, distributed ledger technology and tokenization, central bank digital currencies (CBDCs), and the growing deployment of cloud computing and artificial intelligence in core payment systems. Alongside potential benefits such as 24/7 instant payments, shorter settlement cycles, lower costs, and improved fraud detection, it flagged three main stability risks: faster capital flows that can amplify and transmit shocks and increase liquidity and digital bank run risks without additional regulation; heightened operational risk from reliance on and concentration among major technology providers; and a potential reduction in monetary policy effectiveness as jurisdictional borders fade and cross-border use of certain payment methods expands. Geo-economic fragmentation was framed as both a constraint on benefits, including higher costs and slower cross-border transactions due to sanctions-related requirements, and an amplifier of risks, notably cyber risk and supply-chain disruptions for critical technology components. To mitigate these risks, the remarks called for closer monitoring of technology adoption and its stability impact, increased cross-jurisdiction data sharing and data reporting by non-bank financial institutions and third-party providers, further research on the combined effects of multiple innovations, and greater international cooperation to harmonize and adjust regulation, supported by public-private partnerships and international standards.
De Nederlandsche Bank2025-02-06
De Nederlandsche Bank warns payment system modernization could amplify cross-border financial stability risks and calls for regulatory harmonisation
Olaf Sleijpen of De Nederlandsche Bank noted at a CPMI-CGFS workshop that payment system modernization is improving cross-border payments but introducing financial stability risks. Developments include fast payment systems, distributed ledger technology, central bank digital currencies, and increased cloud computing and AI use. Benefits like instant payments and lower costs are noted, but risks such as faster capital flows, operational dependencies, and reduced monetary policy effectiveness were emphasized, with calls for enhanced monitoring, data sharing, and international regulatory cooperation.