Payments, digital money and crypto-assets

1. The question and the scope

At the ECB's conference on money markets, Pablo Hernández de Cos asks how large the lasting footprint of a monetary authority's assets and liabilities should be once crises have passed. These portfolios swelled after the 2008 crisis and the pandemic, and have been shrinking in the euro area since 2022 and in many other economies. He sets aside emergency episodes and the lower-bound problem, concentrating on the reserves that commercial banks hold at the central bank. Two forces set their level: the operating framework, which fixes supply, and banks' own demand. Because financial systems, institutions and objectives differ, countries can reasonably draw different conclusions.

2. Operating frameworks

Frameworks differ by where supply meets the demand curve. In a corridor or scarce-reserves system, supply sits on the sloping part and banks forgo a positive return when they park reserves overnight, as in Brazil, India or Korea. Ample or abundant systems, such as the euro area's, push the market rate toward or below the deposit rate. Tiered designs pay a lower rate above a quota; Switzerland uses one to keep trading alive despite plentiful reserves. The ideal opportunity cost is debated: a textbook rule favours cheap, plentiful reserves, yet a large central bank footprint can distort allocation and crowd out private markets, while abundant liquidity can head off forced asset sales and scrambles for cash. Both effects coexist, so the net balance is hard to judge.

3. Monetary control and market functioning

Every framework can steer the policy stance, but with high reserves the operational target stays closer to the policy rate, since swings in currency demand or government deposits need no offsetting forecasts; scarce systems must intervene, though deviations are only a few basis points and do not seem to spread to other short rates. Plentiful reserves also let a central bank add liquidity without disturbing rate control. As reserves become abundant, trading incentives fade and interbank activity can wither; in Sweden around half of counterparties have taken part in no money market segment since 2020. Tiering sustains trading. Views differ on how much interbank turnover matters, since secured markets stay busy and supervision can supply discipline, and a recent ECB study finds unsecured lending carries higher regulatory costs than collateralised lending, though Japan's unsecured market recovered after tiering.

4. Financial stability

Abundant-reserve systems supply liquidity in advance, scarce ones provide it after stress appears, often at penalty rates against strict collateral. A large reserve cushion helps banks absorb shocks, lowers reliance on frozen interbank lending, forced sales of other liquid assets and emergency facilities, and trims banks' holdings of government bonds, weakening the sovereign-bank link. In stress, fragmented markets can leave some banks short at day's end. Yet the system may adapt to abundance in ways that raise fragility.

5. What drives reserve demand

Demand has risen over the past decade. Liquidity rules matter in different ways: intraday requirements or supervisory pressure behave like reserve requirements, whereas the standard coverage ratio can be met with other liquid assets, so it shows little link to reserve levels; reserves merely take a larger share as their opportunity cost falls. Frictions raise the insurance value of reserves: selling other liquid assets takes time, runs have become faster as the 2023 turmoil showed, borrowing from the central bank can carry stigma or lack operational readiness, and non-bank institutions may amplify swings in stress.

6. Endogenous effects and open questions

Demand may respond to the framework itself. When markets fragment, inactive banks act like autonomous factors whose payment flows move effective demand unexpectedly, and Swedish banks raised precautionary buffers as supply grew. High reserves may also encourage banks to take on more uninsured deposits and credit lines, leaving them more exposed if liquidity shrinks. Whether such effects can be undone as balance sheets fall is unresolved, though recent experience, including the euro area's, suggests a smooth reduction is achievable.

1. The philosophy behind the agenda

Addressing a business club in Texas, SEC Chairman Paul Atkins says the agency is going back to founding ideas of individual freedom, competition and limited central control. He argues the regulator drifted: rules served political and social goals, enforcement hurt innovators more than wrongdoers, disclosure was bent toward what officials found interesting, and uncertainty over digital assets pushed founders and investors offshore, into markets with weaker safeguards. His aim is American markets that stay deep, competitive and innovative, with strong investor protection and disclosure tied to materiality.

2. Reviving public markets

The centrepiece is a plan to bring back initial public offerings, since the number of listed firms has fallen for decades and the burden of being public has become heavy. Proposals let companies report twice a year instead of four times, overhaul registered offerings and filer categories so obligations match size and maturity, and withdraw the earlier climate disclosure rule. He reports that more than 580 firms listed from early 2025 to mid-2026, up 75% on the previous period, raising $208 billion, with 47 listings in Texas, over a tenth of the national total.

3. Digital assets

Under Project Crypto the agency now says most crypto assets are not securities in themselves, so issuers and buyers can know the status before acting rather than learning it from enforcement cases. An August proposal, Regulation Crypto Assets, would create tailored routes to raise capital, and an innovation exemption would allow on-chain trading of tokenised securities within a supervised framework, with more to come.

4. Governance and Texas

He wants to repeal Rule 14a-8 so states, not the SEC, decide what shareholders may vote on, arguing the federal role since 1942 lacked authority and that competition among states will improve outcomes. Texas, with lower public-company costs, a new business court, headquarters moves, reincorporations by well-known firms and its own stock exchange, is held up as the model, and he closes by calling the reforms a homecoming to first principles.

1. What deposit insurers do today

Speaking in Berlin to the international association of deposit insurers, Pablo Hernández de Cos recalls that the purpose of insurance is to protect less sophisticated savers and sustain public confidence, though a state backstop or central bank liquidity could also do part of that job. Industry funding remains central because it spreads failure costs among banks, and the old worry that insured banks take more risk has been answered by capital rules and resolution regimes that put losses on owners and creditors. Mandates have widened: over 80% of members now play some role in resolution that keeps deposits accessible rather than only paying out.

2. Funding failures

Banks' own loss-absorbing resources should be the first line, as international standards require for the largest banks. But resolution costs are unpredictable, loss-absorbing buffers can be depleted before failure and they do not suit every business model, notably smaller banks. Industry-funded schemes therefore stay vital, as the recent European reform widening their use in resolving small banks illustrates.

3. Three sources of new risk

Crisis tools were built around bank solvency and liquidity stress, so he sketches three areas to review. Risks can arise outside the regulated perimeter, as shown by the Archegos collapse and the 2022 UK gilt disruption, which calls for understanding how stress spreads and possibly access to central bank liquidity for some non-banks under proper oversight. Technology makes runs faster, as the Silicon Valley Bank failure showed, and raises the odds of severe cyber or third-party outages for which authorities need a joined-up plan. Finally, new forms of money could matter if adopted widely.

4. Stablecoins and tokenised deposits

Protection exists because deposits fund credit and carry run risk, and because they are redeemable at par and dominate payments. Asset-backed stablecoins lack stable value and the credit link, so the core rationale is missing; yet a run could force fire sales and bank withdrawals, so safeguards on reserves, capital and holders' legal claims matter, and a 2025 review found major implementation gaps. Tokenised deposits stay tied to a bank and credit provision, so logically they should receive the same protection. Whatever is decided must be explained clearly to avoid public confusion, a task where deposit insurers have proven skills in raising awareness.

5. Conclusion

Over a quarter century deposit insurance has become a core part of the safety net and is moving closer to failure management. Because technology is advancing fast, crisis frameworks must change to handle new risks. Yet proven success against contagion does not mean every product with deposit-like features deserves cover; extension should depend on whether the product delivers a comparable benefit to society. The association has already updated its core principles and published work on digital products, business models and players, which should feed the day's discussions.

1. Why payments matter

Opening the central bank's 2026 payments conference, the Governor of the South African Reserve Bank described payments as basic economic infrastructure, comparable to power, rail and ports: unnoticed when they work, damaging when they are slow or expensive. South Africa wants to catch up with peers such as Brazil, the Philippines and India, whose systems modernised faster. He set out four domestic projects and one regional one.

2. Letting non-banks in

Today any firm that wants to reach the payment system must go through a bank. He argued that payment firms do not borrow short and lend long, the activity that justifies strict bank rules, so they need not be regulated like banks. A proposed exemption notice and authorisation framework would give supervised non-banks a direct route for specific payment activities, with rules on governance, protection of client money, operational resilience and reporting. The guiding idea is equal treatment for equal activities and risks, without shielding incumbents from competition.

3. PayShap's limited reach

The instant low-value payment service launched in 2023 has passed one billion transactions and more than R1 trillion. That remains small: its volumes are a fraction of card and electronic transfer volumes, and a 2023 survey found that cash still dominated everyday payments. Four obstacles hold it back: uneven limits and features across banks, unclear pricing, low public awareness and too few merchants accepting it. He also warned that large closed payment networks should face stronger duties to connect as they grow.

4. Inclusion tools

A single interoperable QR code, QR+, would let small traders accept digital payments without costly terminals; a pilot is about to start. A reusable digital identity for payments, held in a wallet the customer controls, would cut repeated onboarding checks. Payment histories could also help informal firms show their activity and obtain credit, provided customers keep control of their data, records can be corrected and basic services never require consent to unrelated uses.

5. Regional payments and timetable

Cross-border payments in southern Africa remain slow and costly, an issue South Africa pushed during its G20 presidency. Retail transfers below R100,000 are due to move to the TCIB regional system by April 2027, with a hub linking eight pilot countries by October 2027. The authorisation framework should be published by November 2026 and QR+ piloted in early 2027. The central bank will set direction, regulate in proportion to risk and run settlement; the industry is expected to invest and compete.

1. Twenty-five years of the anti-money laundering law

Abdul Rasheed Ghaffour, Governor of Bank Negara Malaysia, used a compliance conference to mark 25 years of Malaysia's 2001 anti-money laundering act. He credits progress to repeated legal amendments, coordination bodies such as the national anti-financial crime and scam response centres and the national fraud portal, five national risk assessments, and supervision of more than 27 000 reporting entities, which earned a positive international evaluation in 2025. Results he cites: about RM1.9 billion of fraudulent transfers blocked in the first half of 2026, more than in all of 2025, and over RM37 billion of assets recovered in five years.

2. New threats

He sees two pressures. Geopolitical fragmentation is changing payment routes and trade corridors and straining cooperation, so it must feed into risk assessments. Technology is accelerating crime: AI-made fakes of voices and faces make scams harder to spot, around 95% of online fraud involves victims tricked into sending money themselves, and INTERPOL estimates AI-driven fraud is several times more profitable than older methods. Detection, he argues, must be automated as fast as deception.

3. Data and collaboration

The central bank, as financial intelligence unit, is investing in data-driven analysis. A pilot of the national fraud portal has flagged over 1 600 suspicious accounts that may be used as money mules, and new policy documents tighten technology risk management and banks' accountability for fraud. Banks and the payment network plan warnings that alert customers before a risky transfer is completed, with a pilot targeted for the first half of 2027, accepting some extra friction. He wants a shift from reacting to preventing fraud, more structured information sharing between firms and with the state, and stronger cross-border cooperation, ending with a call to anticipate, monitor, use technology responsibly and act jointly.

1. A vital ecosystem

At the tenth ACPR-AMF Fintech Forum, his first as governor, Emmanuel Moulin says financial technology firms, now more than 1 200 with about 55 000 jobs in France, drive the sector's dynamism and have matured into a mix that includes fifteen billion-dollar companies. The aim is now to help them scale. Funding rose 51% in the first half of 2026 but remains fragile and needs more European equity, which the Savings and Investments Union should supply through pension and retirement savings, venture partnerships, accessible household products, financial education, a common 28th company regime and a proper European framework for market infrastructure and post-trade.

2. Two guiding principles for supervisors

First, balance innovation with trust through proportionality, synergy with existing processes and technology-neutral rules that keep competition fair. Second, keep a regular, demanding dialogue with the whole ecosystem, since newcomers and incumbents, whether rivals or partners, jointly strengthen Europe against big tech. Tools include a Fintech Charter and the ACPR's innovation unit, and contacts from project leaders have risen sharply in 2026.

3. Challenge one: tokenisation

Faster settlement and lower costs come with stability and sovereignty worries, notably reliance on foreign infrastructure and settlement assets denominated in other currencies. The response has three pillars: central bank money for the digital age, with the digital euro for the public, the wholesale ledger service Pontes launched on 21 September and the longer-term Appia ecosystem; homegrown tokens issued by commercial banks, including deposits and euro stablecoins, pushed by a new Paris strategic group and illustrated by a project settling short-term paper with central bank tokens by end-2026; and regulation, with a targeted revision of the crypto-asset rules and a permanent pilot regime with ceilings near 300 billion euros.

4. Challenges two and three: AI and fragmentation

Nearly eighty percent of fintechs use artificial intelligence, which brings risks for access to credit and insurance, opaque decisions and cyber threats, illustrated by the summer attack on a developer platform. The digital resilience rules and the AI Act, which the ACPR will enforce for high-risk systems from December 2027, provide a base, but frontier models will likely need stronger rules. Geopolitical fragmentation exposes reliance on largely non-European cloud, models and computing capacity, so Europe must foster competitive homegrown players, a goal supported by the Commission's technology sovereignty package. Innovation must go hand in hand with confidence, and Europe should fund and build technology rather than merely import it.

1. Inflation back above target

In her opening statement to an Australian parliamentary committee, RBA Governor Michele Bullock explained that the Monetary Policy Board has raised the cash rate by 50 basis points since February, 75 this year, because inflation, after returning to the 2-3% band in 2024-25, rose again in the second half of 2025 and now runs around or slightly above 3.5%. She blames domestic capacity pressure plus the Middle East conflict, which lifts fuel prices directly and, as firms pass on costs, indirectly. Forecasts put inflation back near the target midpoint only in late 2027. Unemployment of 4.5% shows a labour market a little tighter than full employment.

2. Risks and the housing market

Upside inflation risks are materialising: global cost pressure from the Middle East, the AI boom and extreme weather; firms passing on higher input costs; and a risk that capacity strain worsens pass-through. Growth is slowing and the full effect of past rises is still to come, but business investment, mainly data centres and renewables, is strong, and weak productivity means the economy cannot grow quickly without adding inflation. Housing prices have eased but remain about 50% above early 2020, few borrowers are in negative equity and savings buffers are large, so financial stability risks look contained. She stressed that policy does not target house prices; they matter through wealth, turnover and construction. Whether tightening so far is enough will be examined at the next meeting, and she acknowledged the pain for mortgage holders while insisting that high inflation hurts everyone, especially lower incomes.

3. Payments, cash and tokenisation

On payments, card surcharging will be banned from 1 October alongside lower interchange caps and more transparent costs; a wider review of payments regulation will publish priorities by the end of 2026, covering mobile wallets, three-party schemes, direct bank-to-bank transfers and AI-agent purchasing. Project Acacia found that tokenisation plus new settlement infrastructure could improve efficiency and resilience; a consultation on the bank's own settlement system follows, a tokenisation sandbox is being explored, and there is still no clear case for a retail digital currency. For cash, about half of Australians use it weekly; a new law gives crisis powers, the cash carrier Linfox Armaguard has been designated, and the ACCC will oversee pricing and access.

4. A more open RBA

She finished by reporting that the bank has completed the remaining recommendations of its independent review, including a framework for extra policy tools and an external expert advisory group, and is committed to continuous improvement in governance, risk and resilience.

1. A race for crypto leadership

Addressing a Solana Policy Institute summit in Washington, SEC Chairman Paul Atkins framed the moment as a choice between building the future of finance in America or ceding it abroad. He presented the agency's Project Crypto as a rule-by-rule effort to make the country the world's crypto capital, and urged Congress to pass the CLARITY Act, adding that the administration will act with or without it.

2. Three proposals

First, the proposed Regulation Crypto Assets would let founders raise money using digital assets under clear securities rules; the main feedback asks when an investment contract ends once promised work is done. Second, transfer-agent rules left untouched for about forty years, written for paper certificates, are proposed for modernisation toward tokenised shares. Third, staff are drafting a proposal that would let advisers and regulated funds hold crypto, including self-custody where no qualified custodian exists and through state trust companies.

3. One architecture and a warning

Atkins presents these as three pillars of one framework covering the whole life of a digital asset: its creation, its trading, its transfer and its safekeeping. Citing a Jefferson line about institutions keeping pace with the times, he warned that failing to adapt would send blockchain finance's best advances overseas, and promised clarity while staying within the SEC's statutory mission.

1. A world of repeated supply shocks

In an interview during a visit to Mumbai, BIS General Manager Pablo Hernández de Cos said recent central-bank strategy reviews share one conclusion: geopolitical tension and supply disruptions have become more probable. Over six years the world has absorbed the pandemic, the war in Ukraine, tariffs and now conflict in the Middle East. Such shocks push growth down and inflation up, so central banks must look at medium-run effects, stay focused on price stability and watch second-round effects on core inflation and expectations, while recognising they cannot solve everything alone. Growth has so far held up, helped by AI investment and exports. For resilience he sees a three-step approach: inventories in the short run, diversification of suppliers in the medium run, and technology, such as alternative energy sources, in the long run.

2. An AI boom that may not last

He warned that AI investment shows signs of becoming unsustainable, for two reasons: a race for market share breeds overinvestment, and spending increasingly relies on debt and leverage, including murky private lending vehicles and circular financing. A bust matters because AI has been a main pillar of recent resilience, supporting investment, wealth-driven consumption (notably in the US) and exports in some Asian economies; a reversal could hit all three, amplified by financial channels. On jobs, AI can complement or replace work depending on the task and sector, so retraining and active labour-market policies are essential, especially in developing economies.

3. Cooperation, cyber and regulation

On access to frontier technology, scale economies point to concentration in a few countries and firms, so global cooperation is needed to spread the benefits, and because financial stability is a global public good. AI-enabled cyber capabilities help defenders and attackers alike, and an incident can spread across borders, so coordination is the only effective response. He judged the bigger regulatory danger to be divergence between countries rather than slowness, and held up India's work on fast payments and data privacy as a good example.

4. Stablecoins and tokenisation

Stablecoins fall short of what money needs: exchange one-for-one with central-bank money cannot be assured when crises hit, and worries about integrity, fragmentation and interoperability remain. Because they are mostly dollar-based, wide adoption could threaten emerging economies' monetary sovereignty; the answers are international coordination on rules and, at home, good policy that builds trust. He backs two paths: tighter stablecoin regulation, and tokenisation inside the traditional two-tier system, with tokenised bank deposits and central-bank reserves. Project Agorá, on wholesale cross-border payments, now enters its second phase.

1. Potential turned into impact

At the Global Fintech Fest, RBI Governor Sanjay Malhotra said that what was once aspiration is now daily reality: roughly 570 million basic bank accounts under the government scheme, hundreds of millions of micro-insurance policies, and about 24 billion UPI payments a month. The real achievement, he said, is that digital finance became ordinary, so even a street flower seller shows a QR code. He credits public-private partnership rather than technology or officials alone. The hardest task remains the last mile: informal-sector savings, micro-insurance, small pensions and small loans for women, farmers and smaller towns, where firms too often chase customers who are already banked. Newer tools, whether AI, quantum computing or tokenisation, are only means to that end.

2. Four ingredients of trust

Trust, he said, is a daily working practice, earned one payment at a time. Recalling hundis, the handwritten merchant notes honoured across great distances on reputation alone, he argued that trust once rested on merchants, now rests on institutions and must extend to intelligent systems. His four ingredients: mitigate AI risks such as opacity and bias; treat customer data as a fiduciary duty, following the consent-based design of the Account Aggregator; accept that responsibility grows with size, so firms become too significant to be careless and must invest in resilience and cyber security; and avoid structuring a business around regulatory gaps or scaling first and seeking forgiveness later, since the sandbox exists for early engagement and rules eventually catch up.

3. A global vision

India's fintech sector ranks third worldwide by funding, with 2.4 billion dollars raised in 2025 and 30 unicorns. After a decade of building for India, he wants the next to build for the world, exporting solutions for inclusion, affordable payments, digital identity and interoperable public infrastructure, and earning leadership by having others adopt its standards.

4. What the RBI is doing

The central bank calls fintech a strategic partner. It runs an on-tap regulatory sandbox, an annual hackathon and a self-regulatory-organisation scheme, recognising United FinTech Forum as the second such body. It is building public infrastructure: the Unified Lending Interface, Account Aggregator, the MuleHunter.ai fraud detector and a proposed Digital Payments Intelligence Platform, plus pilots of programmable CBDC and tokenised certificates of deposit, and it announced tokenised corporate bonds settled in CBDC together with SEBI. Regulation stays activity-based, with the same treatment for the same risk, and light where innovation is young. New AI, model-risk and quantum-resilience work aims to anticipate change.

1. Shocks and weaker growth

Addressing the Bangkok Business Summit, Bank of Thailand Governor Vitai Ratanakorn noted that shocks now arrive faster, and each has left Thailand on a lower growth path: average growth fell from 5.3% after 1997 to 3.7% after 2008 and 2.4% after the pandemic. Ahead of the IMF-World Bank meetings in Bangkok, he framed the theme of new horizons, empowering people and building resilience, around four pillars: digital and AI transformation, resilience in a fragmented world, climate-adaptation finance, and demographic change and the longevity economy.

2. The other three pillars

Thailand can be a trusted hub: though not the cheapest location, it offers stability, and over five years foreign direct investment into the country rose 20.9% while global flows fell 4.2%. Small firms need help adjusting. On climate, the central bank's transition financing and Thailand Taxonomy have supported over 750 businesses and mobilised more than 210 billion baht, with the taxonomy covering six sectors that account for 95% of emissions. Ageing opens opportunities in healthcare and wellness.

3. Digital finance and fraud

Thailand's free instant-payment system PromptPay has 83 million accounts and handled 2.51 billion transfers in July alone, and the Paotang app built on it reaches over 40 million users. But scams are growing: Asia suffered close to 66% of the world's scam losses in 2024, Thai fraud cost over 43 billion baht (about 0.2% of GDP), and attacks on banks rose roughly 45% in 2025. With the IMF and World Bank, Thailand drafted the Bangkok Blueprint, twelve considerations for fraud-resilient finance. Security standards cut money-draining apps to zero, and later measures against authorised push-payment fraud (tougher scam-account rules, money tracing, daily transfer caps, shared-responsibility guidelines) cut such losses almost 80% from the 2024 peak.

4. Cutting off illicit money

Since fraud proceeds exit through cash, gold, foreign exchange and stablecoins, the bank limited large cash withdrawals (down 52%), tightened online gold reporting (large withdrawals down 70%), strengthened oversight of currency exchangers and, with the SEC, tightened rules for digital-asset trading. A new framework of commitments across banks, e-payment firms, lenders and money changers will be reaffirmed next week, because a secure system is a strategic asset.

1. Why payments matter, and what is new

Speaking at Jackson Hole, Managing Director Kristalina Georgieva argued that faster and cheaper cross-border payments are worth pursuing because high costs and curbs on correspondent banking push activity into informal channels and hold back trade in digital services, including AI. Domestic payment innovation has already helped poorer households, but cross-border progress is uneven. Many projects now link national systems, from the ECB's instant-payment platform to schemes in Southeast Asia and southern Africa and a project at the BIS. Whether private ledger technology can transform this at global scale is unknown, yet tokenization and stablecoins may make global finance more fluid, spreading risks faster and raising the price of policy mistakes.

2. Regulation must be coordinated

Her first argument is that these instruments need an internationally coordinated response: strict and ideally harmonized rules on reserve pools so coins can always be redeemed at par, the same rules for similar instruments to limit arbitrage, protection against excessive loss of bank deposits since banks fund households and small firms, and modernization where activity has drifted to lightly regulated nonbanks. Cooperation on data, legal frameworks and interoperability is essential.

3. Emerging markets need stronger buffers

Stablecoins can facilitate tax evasion, currency substitution and leakage around capital controls, which still shield about a quarter of IMF members, some of which also rely on financial repression. Central banks should supervise domestic stablecoin intermediaries and build larger foreign exchange reserves, while governments broaden tax bases and cut primary deficits, even though appetite for consolidation is weak after generous support.

4. Issuer countries and fiscal discipline

Countries whose assets back stablecoins, above all the United States, can tap a pool of roughly fifteen trillion dollars held abroad and may lower funding costs, perhaps at others' expense, but such savings are marginal and no substitute for sound policy. Benchmark yields in the United States, France and Japan are at multi-decade highs and lift curves worldwide. Central banks must protect price stability and not rescue public finances through lower rates or asset purchases; the remaining answer is fiscal choice between lower spending and higher taxes, without further delay.

5. Closing note

Technology tends to knit a fragmented world back together, and she is confident cross-border payments will eventually change, provided the right conditions are set to capture the benefits and manage the risks.

1. What makes money trustworthy

Opening a panel at the Jackson Hole symposium, BIS General Manager Pablo Hernández de Cos framed the debate around the foundations of money: a common unit of account; singleness, meaning every instrument in that unit can be exchanged at par for central-bank money with finality; and elastic liquidity, supported by interoperability and financial integrity. Today's two-tier system delivers these through supervised intermediaries but still suffers patchy interoperability, limited competition and inefficient cross-border payments, which tokenisation and distributed ledgers could ease. The test for any innovation is whether it serves rather than erodes those foundations.

2. Stablecoins versus tokenised deposits

On singleness, a stablecoin holder paying someone who accepts a different coin must trade through markets where deviations from par are normal and larger under stress, while tokenised deposits settle in central-bank money and keep par. On interoperability, stablecoins sit on fragmented public blockchains, whereas tokenised deposits, with tokenised reserves as the settlement asset, can be fungible across banks. On integrity, most stablecoin balances sit in self-held wallets and more transfers bypass identity checks, complicating anti-money-laundering rules, whereas supervised, account-based deposits make this manageable. Hence today's stablecoins do not meet the standard of money accepted without questions.

3. Macro-financial effects

If stablecoins scale, reserve choices matter: holding wholesale deposits raises bank funding costs and tightens lending, holding short government bills drains banks' liquid assets, and holding central-bank reserves drains system liquidity, with smaller banks hit hardest. Extra demand for bills would lower short yields and ease fiscal space, so BIS scenarios show a modest net effect. Issuers remain exposed to runs, with fire sales able to strain money markets. Tokenised deposits keep deposit-taking tied to lending, but siloed adoption could favour large banks, and round-the-clock transfers could speed outflows.

4. A policy path

For stablecoins to work as money they would need enforceable par redemption backed by reserves and backstops, par exchange and finality across chains, and consistent anti-money-laundering control, including peer-to-peer transfers; some gaps are fixable by policy, others structural. Digital dollarisation also threatens monetary sovereignty. Tokenised deposits are promising but do not yet exist as interoperable multi-bank systems; challenges include avoiding walled gardens, governance, legal clarity on finality and smart contracts, resilience and migration. He proposes coexistence: tokenised deposits for most payments and settlement, stablecoins in narrow roles under strict regimes or as investment products, with central banks anchoring singleness, promoting interoperability and integrity, and watching credit effects. Project Agorá shows the approach is feasible. The BIS's annual report this year backs the same pragmatic course: fold tokenisation into the two-tier system anchored in central-bank money, and agree consistent international rules for stablecoin arrangements. He added that, in emerging economies, coins tied to foreign money bring dollarisation risks, and the strongest shield is good macroeconomic policy together with effective local payment networks.

1. A lower inflation target

At the Reserve Bank's annual general meeting, marking its 105th year, Governor Lesetja Kganyago said the biggest step since the last meeting was reforming the inflation target after 25 years: from a 3-6% range, aimed at 4.5% since 2017, to 3% plus or minus one point from 2025, in line with peers. An oil shock pushed headline inflation up to 4.5% in May, then 5% a month later, and the bank raised rates to 7% in May, then held in July; before the shock its model pointed to about 6%. He gives no promises on the rate path, but says lower inflation brings lower rates, and long bond yields near pre-war levels show markets expect the shock to pass.

2. International and technology issues

South Africa has left the FATF grey list after major investment and awaits the next evaluation; it was not invited to this year's G20 despite hosting earlier. On AI and stablecoins he sees both opportunity and threat, defends common crypto rules within the country's capital-flow controls so the playing field is level, and says payments modernisation without tokenisation can still deliver cheaper, faster payments, with a 50% stake in BankservAfrica bought and rebranded PayInc.

3. A strong balance sheet

Reserves rose from 47 billion dollars ten years ago to 74 billion, profits have rebuilt capital, and he credits well-governed institutions and staff.

1. Hong Kong's progress and advantages

At a Hong Kong financial summit attended by Chief Executive John Lee, PBOC Governor Pan Gongsheng praised the city's momentum since early 2025: strong listings, dim sum bond issuance above 2 trillion yuan, and its status as the largest offshore yuan centre and largest cross-border wealth hub. He credits central government support and cites Hong Kong's open environment, capital markets, legal system and mainland links, plus China's stable macro policy, innovation focus and 15th Five-Year Plan, with growing global demand for the yuan in investment, financing and reserves. He noted accommodative monetary policy, proactive fiscal policy and a sound financial system on the mainland, and that Hong Kong will draft its first five-year development plan to fit the national strategy.

2. Connectivity and diversified markets

First, deepen connectivity: more listings and bonds, and wider stock, bond, wealth and swap Connect schemes; the Southbound Bond Connect annual quota rises from 500 to 800 billion yuan, its bonds become repo collateral, products widen to Hong Kong dollar and Macau bonds, and China's reserves will raise their Hong Kong allocations. Second, diversify beyond equities into bonds, gold, commodities and derivatives: with global rate and inflation swings rising, the stability of Chinese bonds offers diversification, and low yuan financing costs give Hong Kong a rare chance to draw sovereign and corporate issuers and become the region's leading financing hub. Five-year yuan government bond futures will launch soon, the Bond Connect company will upgrade into a trading-platform operator with CFETS, Northbound bonds will count as collateral at local clearing houses, and a gold vault and clearing link with the Shanghai Gold Exchange plus more yuan commodity products will follow.

3. The offshore yuan hub and stability

Third, strengthen the offshore yuan hub: the HKMA's business facility rises from 200 to 500 billion yuan with tenors up to three years, central banks get a yuan repo facility whose first operation was done with the HKMA, a Bank Indonesia-HKMA local-currency framework supports direct yuan-rupiah trade, fast-payment links expand to more institutions, scenarios and risk controls, and more central bank bills and offshore government bonds will deepen the asset pool; Hong Kong handles over 70% of cross-border yuan settlement. The finance ministry will also be backed in enlarging and diversifying its offshore government bond issues. Fourth, safeguard stability: Hong Kong came through the Asian crisis and the 2008 shock with central support, and, recalling Zhu Rongji's 1998 pledge, he said the central government will keep giving full support, given China's reserves, the world's largest. He invited global investors to join.

1. The savings and investments union

Speaking in Frankfurt for the EU's Irish Presidency, Bundesbank President Joachim Nagel urged action on two files. First, the savings and investments union: Europe relies on outside venture capital, especially in later-stage rounds, though its high savings could finance its own scale-ups. He backs the One Europe, One Market Roadmap, with a single EU-wide company form, updated securitisation rules and a market integration and supervision package to be adopted this year; he welcomes more centralised supervision of securities and non-banks, with proportionate design and a role for central banks, and suggests a 28th regime for digital securities to reduce national fragmentation and strengthen the euro's international role.

2. Sovereignty in payments

The euro is the world's second most important currency, and holding that position takes broad capital markets, stability-oriented monetary policy and modern payment infrastructure that keeps working even in an emergency. Yet non-European firms such as Mastercard, Visa and PayPal dominate, a dependence as risky as in defence or AI. Europe needs its own digital ecosystem anchored by central-bank digital currency for both wholesale and public use. The digital euro would work in stores, online and person to person and give private innovators a European base. Trilogue talks began last week, a pilot starts in mid-2027 and launch is still planned for 2029. Europe, he concluded, works only when it works together, not just through a national lens.

1. The euro's place in the ranking

Using the World Cup as a metaphor, Bundesbank President Joachim Nagel said the euro is the world's second most important currency but far behind the dollar: the dollar made up 57% of foreign reserves at the end of 2025 against about a fifth for the euro, and about 60% of foreign-currency debt against around 30% for the euro; US exporters invoice almost entirely in dollars while EU exporters take dollars for about a third of their sales. The dollar is unlikely to lose its role soon but is not invulnerable: Bundesbank research found that political pressure on the Fed was read by markets as a loss of confidence, with equities down and uncertainty and gold up, and gold's dollar price jumped nearly seventy percent from the April 2025 tariff announcement until the strikes on Iran, then gave back about half. The euro gained little, and stablecoins, almost all dollar-based, could further help the dollar.

2. Why a stronger euro matters and how to get it

A stronger international euro would bring strategic autonomy, less exposure to exchange-rate swings and lower funding costs. The basics are trust in price stability backed by central bank independence, a rule-of-law framework, defence capability and stable growth. Channelling savings to productive uses through the savings and investments union, including partly centralised supervision at ESMA, cheap access for small investors and better financial literacy, would help finance innovative firms. He added that institutions in Europe need to be able to rely on a stable legal order and that those qualities are worth more today because they are no longer guaranteed. Reliable euro liquidity abroad matters too: the ECB made its EUREP repo facility permanent for central banks worldwide, alongside swap lines.

3. The digital euro and wholesale central bank money

Payment sovereignty also underpins the euro's role. The digital euro would give one payment solution across the euro area, reduce dependence on non-European infrastructure and allow conditional payments triggered automatically on delivery or usage, though it will not be programmable money and users stay in control. A wholesale version, a project called Pontes, will deliver central bank money on distributed ledgers from this autumn. Together with better cross-border payments, public money as a base and private firms as innovators, these would make the euro more attractive. He closed by saying the euro must remain a strong player on team Europe, with the Eurosystem doing its share, and that Europe has a great future in the international monetary system.

1. A broader Eurogroup

After the 9 July meeting, Eurogroup President Kyriakos Pierrakakis said budgets, debt and fiscal rules remain core, but the economy is changing so fast that competitiveness, technology, AI, energy security and geopolitics form one reality, so the Eurogroup must evolve. The new twelve-month work programme has four priorities: fiscal coordination, the savings and investments union, Europe's competitiveness together with its economic security, and a stronger global, digital and strategic role for the euro, and it will widen to cover military funding, energy supply security and tech autonomy.

2. AI and digital finance

Ministers heard from Mistral's chief executive Arthur Mensch. AI can lift productivity and strengthen finance through better risk management and cyber defence, but the same capabilities create new systemic risks, which the ESRB and ECB supervisors highlighted for frontier models; Europe must mobilise capital so its AI champions can scale at home. A common statement on digital finance calls for speed, legal clarity and public-private cooperation, and he welcomed the European Parliament's vote on the digital euro.

3. Fiscal stance and the euro

On the fiscal stance, uncertainty is high given the Middle East, and defence, energy and public investment needs must be met without losing the credibility of the agreed fiscal framework. The ECB showed that the euro's international role is strengthening; stability remains the foundation, but competitiveness decides where Europe stands.

1. Honouring Mundell

Opening a Rome workshop held with CEPR and LUISS in memory of the Nobel laureate Robert Mundell, the Governor of the Bank of Italy recalled that Mundell's work covered optimal currency areas, the global monetary system and its geopolitics. His 1961 analysis saw low labour mobility as Europe's main obstacle to a shared currency, while others stressed the lack of common fiscal stabilisation.

2. A political project

In a 1969 plan, Mundell argued that Europe's money should rest above all on political reasons. Panetta agreed: monetary union grew from the post-war drive for reconciliation that produced the Coal and Steel Community in 1951, and three decades after Mundell's plan the euro was born.

3. Two waves of crises

The 2008 financial crisis and the 2010-11 debt crisis split the area into core and periphery, with uncoordinated budgets leaving monetary policy alone until Draghi's pledge restored calm. The pandemic and energy shock, though larger, met a joint response through Next Generation EU and national support.

4. What remains to be done

Europe should revive growth with reforms and joint investment in research, energy, digital networks and AI; build a true savings and investments union with simpler rules and a common safe bond; and digitalise payments, including a digital euro, to protect monetary sovereignty, a risk Mundell already linked to the dollar. Quoting Monnet's idea that Europe is built through crises, he argued that such slow, crisis-led progress no longer fits a fast-changing world: Europe must act before crises force it to, and the euro stands for unity, sovereignty and shared values.

1. Central bank money in the digital age

Speaking by video to a European payments conference, Bundesbank President Joachim Nagel argued that the digital euro answers three developments. First, payments are digitalising: cash fell from almost half to two fifths of point-of-sale payment value between 2019 and 2024, online purchases doubled in value share to 36%, and shops not accepting cash tripled to 12%. The digital euro would complement cash, keeping central bank money, the anchor of the monetary system, available to everyone in digital form as legal tender. The Eurosystem would provide basic public infrastructure and common standards while banks and payment firms remain the interface with customers and build services on top, such as conditional payments like an automatic insurance payout. To protect financial stability and bank lending, there will be holding limits and no interest, with larger payments covered by a waterfall from a linked bank account; it is a means of payment, not an investment.

2. Sovereignty and privacy

Second, payments are critical infrastructure and Europe depends on non-European providers: more than two thirds of euro-area card payments run on non-European systems, and 13 of 21 euro countries lack a national solution. Convenience must not come at the expense of the ability to act in a crisis. The digital euro would be an autonomous European base infrastructure, not isolation. Privacy is a design requirement: the Eurosystem sees only pseudonymised holdings and cannot build individual profiles, and the offline mode, phone to phone, gives privacy almost like cash.

3. Europe's place in digital finance

Third, the euro's role, as second international currency with inflation averaging about 2% since launch, depends on modern infrastructure. The digital euro is one block in a broader payments strategy, which also includes the wholesale Pontes project for settlement in central bank money on distributed ledgers, and Europe should help shape standards and rules for tokenised markets and stablecoins. He stressed that central bank money and private solutions have long coexisted and complement each other, that the digital euro must not be built against the financial sector, and that its design is meant to fit the existing financial system. He ended with an appeal to turn the digital euro into a shared undertaking with banks and payment firms, whose critical objections will help refine it.

1. Why small firms matter

Opening an MSME Day event in Kochi, Reserve Bank of India Governor Sanjay Malhotra said micro, small and medium enterprises are about 90% of businesses worldwide and half of jobs; in India they produce 31% of GDP, about 35% of manufacturing output and close to half of merchandise exports, supporting over 320 million livelihoods. A financial system that serves its smallest and most numerous participants poorly, he said, is not serving the economy.

2. What the RBI has done

He listed measures: priority-sector classification with a sub-target for micro firms; collateral-free loans, with the limit doubled from 1 million to 2 million rupees; wider credit-guarantee cover with zero risk weight on the guaranteed portion; the receivables discounting platform TReDS; simpler working-capital norms; priority-sector recognition for co-lending; the Account Aggregator, which supported about 3.5 trillion rupees of lending in 2025-26; and a ban on prepayment charges on floating-rate loans to individuals and small firms. Town halls, banker training and empowered committees keep the dialogue going. Bank credit to the sector reached 36.79 trillion rupees, growing about 15% a year over five years against 13.7% for all credit, though he admitted the gap is not closed.

3. Unified Lending Interface and expectations

The Unified Lending Interface should do for credit what UPI did for payments, letting lenders assess a borrower with consent-based digital data such as tax filings, bank statements and utility or land records instead of weeks of paperwork, which helps firms with thin credit histories. He asked financial institutions to invest in the public digital stack, accelerate scheme delivery and treat small firms as long-term partners, not regulatory obligations. He asked entrepreneurs to invest in technology and innovation, use the available platforms, register on the free online Udyam portal to access government schemes, and build trust through formalisation, digital adoption and financial discipline. The RBI promises to keep building the rails and reducing friction.

1. Why new forms of money matter for policy

Opening a payments and settlement conference co-hosted with the Bank of Canada, Bundesbank President Joachim Nagel noted that payment systems are part of the monetary system, which rests on central bank money and private money. Three new forms are emerging: retail central bank digital currency, such as the digital euro, planned for 2029; stablecoins, almost all dollar-based; and tokenised deposits, still mainly in wholesale settings. Their footprint is small today, so impact on monetary policy transmission is limited, but it could grow, which is why analysis starts now.

2. Effects through the banking sector

He focused on the bank lending channel, where monetary policy works through banks' funding and willingness to lend. Tokenised deposits barely change the nature of bank deposits, so effects should be limited. A digital euro could in principle draw deposits away from banks, but the holding limit and the absence of interest, which keeps it a means of payment rather than savings, will contain this. Stablecoins are harder: a euro-area shift to foreign-currency coins looks very unlikely given the euro's credibility, while euro stablecoins depend on reserves and funding sources. Under the crypto-asset regulation, issuers must hold a large share of reserves as bank deposits; deposits would shift from many stable private holders to fewer, more mobile institutional ones paid near market rates and concentrated in larger banks. Buying government bonds from banks would shrink balance sheets, while substituting for cash could lengthen them.

3. Conclusions

Effects run mainly through banks' size, deposit mix and funding costs, and differ by instrument: small for tokenised deposits, larger but contained for a digital euro, complex for stablecoins. In most scenarios transmission through banks could get stronger as deposits become more mobile and banks compete for funding, except where stablecoins replace cash. In the long run, shrinking bank lending could move credit elsewhere and weaken the traditional channel while strengthening the asset-price channel, so the net effect is undetermined. None of this removes the ability to deliver price stability; it means the new forms of money must be factored into decisions. Quoting Heine's Loreley, he urged central banks to keep their eyes open and steer with care.

1. Two challenges at once

Opening with the medieval Champagne fairs, where merchants cleared debts on paper rather than shipping silver, Christine Lagarde said Europe's first common market faded when tolls rose and sea routes opened. Today two challenges arrive together: technology, above all tokenisation, is rewriting how money and trades settle, and geopolitics has made owning financial infrastructure a matter of power, so sovereignty counts. For Europe she sees an opportunity to cut fragmentation in capital markets and open retail payments to pan-European operators.

2. Wholesale markets and retail payments

In wholesale markets, 32 central securities depositories keep records across the Union against two in the United States, and tokenisation on a shared ledger would record ownership once and settle payment simultaneously. But it needs a risk-free settlement asset: more than 60 market participants said they will not issue digital assets at scale without settlement in the central bank's own money, so the Pontes project will settle tokenised transactions this year, and Appia is drafting a blueprint for a single European tokenised market. In retail, the digital euro would keep public money available as cash fades, and because it would be legal tender accepted everywhere with open standards, it could break the vicious circle that has stopped European card schemes reaching scale: international schemes handle over 60% of card payments and 13 of 21 euro countries lack a national scheme.

3. Cross-border payments and the euro's role

Cross-border payments remain slow and costly, a gap dollar stablecoins want to fill; the Eurosystem is linking its instant payment system TIPS with others, including India's UPI. Deep integrated markets anchored in public money would make the euro more attractive to global users, but this needs market investment and shared standards, and governments must provide a common legal framework for digital assets so that national rules do not rebuild the fragmentation technology is dissolving.

1. The shock and the lessons of 2022

Three months into the Middle East war, world oil supply is about thirteen percent below its prewar level and liquefied gas about twenty percent, with very uneven effects. Georgieva first asked Europe to help the hardest-hit poor countries reach fertilisers and diesel. She praised decades of transition policy, which cut the energy intensity of European output by more than forty percent and ended dependence on Russia; today's gas shock is much smaller than in 2022, though the oil shock is almost as large.

2. Targeting support

Most new aid measures are temporary and cheaper than before, but again largely untargeted, which mutes the price signal and reduces energy saving. In 2022 over two-thirds of support was poorly aimed; protecting only the poorest forty percent of households would have saved almost two-thirds of the cost, whereas the richest fifth received nearly three times more than the poorest. The IMF therefore urges targeted help that still preserves savings.

3. Why an energy union

Three facts make the case. European industry pays two to three times more for electricity than American and Chinese rivals, and the doubling of real industrial energy prices has cut value added in energy-intensive industries by an estimated eighteen percent. Prices are also volatile and dispersed, with some countries paying over three times as much as others. And the union still imports more than half its energy, so outside disruptions pass quickly into prices.

4. How to get there

Speed up cheap renewables, integrate the internal market and keep private incentives right. Completing planned interconnectors, with more solar, wind and nuclear power, could lower average electricity prices by more than ten percent, and prices often fall on both sides of a new link; part of export revenue can be shared with the public. A common blueprint for supply, storage and interconnection is needed because wind and sun are unevenly spread. The carbon market should be protected: its revenue could reach about one percent of output, more than the public investment cost of the transition. Europe should use the crisis and act as one.

1. Inflation and the cash rate

Addressing a Senate committee on budget estimates, RBA Governor Michele Bullock explained that inflation fell into the target range in early 2025, prompting rate cuts, but accelerated markedly after mid-2025 as strong output growth added to capacity pressure, so it was too high even before the Middle East conflict. The conflict has driven up oil and commodity prices, lifting fuel prices and showing tentative signs of pass-through, including to new dwelling costs, with likely second-round effects. The Board has lifted the cash rate three times this year, 75 points in all, which takes one to two years to work fully but is already easing the housing market, and which helps contain domestic pressures and second-round effects even though it cannot reverse the oil-driven increase already in train.

2. Outlook and payments

She recognised the strain on households but warned that persistent inflation would become embedded in price and wage setting, require higher rates for longer, and hurt lower incomes most. May forecasts see headline inflation peaking above 4.5% in the June quarter, underlying inflation above target until mid-2027, slower growth and a rising but still low unemployment rate, with two adverse scenarios for a longer conflict. Investment in software, data centres and renewables is a bright spot. On payments, card surcharging should end from 1 October, interchange caps are being lowered and cost transparency improved, and Project Acacia found growing interest in tokenisation to improve wholesale markets, with further initiatives being planned.

1. A meeting of academies in Sinaia

Opening a seminar in Sinaia with the Spanish royal academy for economic and financial science and Romania's Academy, National Bank of Romania Governor Mugur Isărescu welcomed guests, paid tribute to former Prime Minister Petre Roman and the improvised decisions of the early-1990s transition, and noted that the central bank has hosted an international financial stability seminar there for almost twenty years. He described long ties with the Spanish academy, recalled earlier joint sessions and his own talks on Romania's role in the EU and on monetary policy in an emerging economy, and said economics, law and sociology are anthropological disciplines that gain meaning through dialogue.

2. Money without cash

Reflecting on a career that began with handwritten ledgers and administered exchange rates, he said cash was once the only money citizens knew, whereas today people pay, send money abroad or borrow without touching banknotes, through bank cards, the internet, mobile payments and now central bank digital currencies. With the ECB and others debating a digital currency, he wondered whether central banks are agile enough to manage the shift without losing stability, trust and protection of citizens; he has no firm answers and values dialogue between solid institutions. He ended with Sinaia's history and a football anecdote, giving guests a commemorative coin on Steaua Bucharest's 1986 European Cup win over Barcelona.