- Digital innovation is transforming finance, potentially enabling greater competition and efficiency in payment systems and financial intermediation. However, it also poses new macro-financial challenges and raises the broader question of how to preserve trust in money in the digital age.
- Stablecoins display some of tokenisation's potential to support faster, programmable payments. Their current form, however, falls short on key properties of money and has structural flaws. Widespread adoption could affect macroeconomic and financial stability.
- Advancing the future monetary system requires global coordinated efforts by policymakers along two main dimensions: tackling weaknesses in current stablecoin arrangements to mitigate risks and bringing the technological advances of tokenisation into the two-tier system.
The path to the next-generation monetary and financial system lies in leveraging innovation to improve today's two-tier financial infrastructure, while safeguarding trust in money, the Bank for International Settlements (BIS) said today.
A special chapter of the BIS's Annual Economic Report 2026 assesses evolving forms of financial architectures based on programmable platforms and different instruments that provide money-like functions.
According to the BIS, financial innovation can deliver significant benefits when it is anchored in sound institutional arrangements, consistent legal frameworks and strong supervision. Bringing tokenisation – the digital representation of assets on programmable platforms – into the current financial system, where central banks provide the monetary anchor and commercial banks provide services to the public, can open new possibilities such as programmable payments.
By integrating digital innovation such as tokenisation into the existing financial architecture, authorities can shape the future of money, the economy and the financial system in the public interest while preserving trust.
Achieving this will require domestic and international coordination and cooperation.
The report says that current stablecoin designs fall short in terms of the key properties that ensure trust in money – in particular singleness, or the ability to redeem different forms of money exactly at par in exchange for central bank money. Circulation on public, permissionless blockchains and features of their design introduce challenges for resilience against financial crime and redeemability and interoperability across ledgers.
While their overall impact on economic growth could be modest, wider stablecoin adoption could usher in significant changes in bank funding and credit provision and potentially pose financial stability challenges. These effects depend on the composition of stablecoin reserves, how they are ultimately used and regulated, and how other parts of the system react. The chapter explores a range of stylised scenarios to illustrate potential ramifications.
High global demand for stablecoins, which today are mostly denominated in US dollars, could also make capital flows more volatile and challenge monetary sovereignty in economies with relatively weaker fundamentals.
Modernising the financial system will require global coordinated policy efforts on two fronts.
In the near term, it is key to tackle the weaknesses of the current stablecoin architecture. The appropriate regulatory measures depend on whether stablecoins are used for payments at scale or confined mostly to use as investments.
The report outlines how this vision could bring technological innovation into the two-tiered system. A "unified ledger" that integrates different forms of tokenised money in the same venue could help harness the benefits of digital innovation while preserving trust in money.
Correspondent banking provides an example: the Project Agorá prototype, a public-private partnership that brings together eight central banks and over 40 regulated institutions, showcases the potential to improve wholesale cross-border payments. It features a shared platform with a unifying ledger for tokenised commercial bank deposits and separate, jurisdiction-specific ledgers for tokenised central bank reserves.
Note to editors:
The full BIS Annual Economic Report 2026 and the BIS Annual Report 2025/26 will be published on 28 June.
Facts Only
* The Bank for International Settlements (BIS) assessed evolving forms of financial architectures based on programmable platforms.
* Digital innovation transforms finance, potentially enabling greater competition and efficiency in payment systems and financial intermediation.
* Stablecoins display potential for faster, programmable payments but have structural flaws regarding key properties of money.
* Widespread stablecoin adoption could affect macroeconomic and financial stability.
* Current stablecoin designs fall short in ensuring trust in money, particularly singleness and the ability to redeem forms of money exactly at par with central bank money.
* Circulation on public, permissionless blockchains introduces challenges for resilience against financial crime and interoperability across ledgers.
* High global demand for dollar-denominated stablecoins could make capital flows more volatile and challenge monetary sovereignty in weaker economies.
* Financial innovation requires anchoring in sound institutional arrangements, consistent legal frameworks, and strong supervision.
* A prototype named Project Agorá involves eight central banks and over 40 regulated institutions sharing a platform for tokenized commercial bank deposits and separate ledgers for tokenized central bank reserves.
Executive Summary
Full Take
The narrative frames digital innovation as an inevitable force requiring containment through regulation, positioning trust preservation as the central obstacle to progress rather than an inherent feature of the system. This creates a specific pattern where technological advancement (tokenization) is presented as beneficial only when subsumed into existing, trusted structures (the two-tier system). The underlying assumption is that trust is a prerequisite for innovation, which can be effectively managed through institutional coordination and strict regulatory oversight.
The emphasis on stablecoin flaws—lack of singleness and redeemability—serves to establish a high baseline of skepticism regarding decentralized digital assets. This framing aligns with patterns of defining novel technologies primarily by their potential instability or risk (e.g., fear appeals). The suggestion that global coordination is the required solution places the burden for resolving systemic risks on international policy bodies, which can act as a mechanism to centralize regulatory power.
The most significant implication is the shift of focus from pure technological capability to institutional architecture. By advocating for a "unified ledger," the discussion implicitly seeks a centralized mechanism to manage distributed assets, raising questions about the trade-off between programmable efficiency and sovereign control over monetary policy. The narrative suggests that the path forward is not simply managing risk but fundamentally reshaping monetary sovereignty through coordinated system design.
Patterns detected: ARC-0043 Motte-and-Bailey, ARC-0121 Framing as Risk, ARC-0078 Authority Games (appeal to coordination).
Sentinel — Human
This text demonstrates high coherence and institutional language, strongly suggesting it originated from or was heavily refined by human policy writers, likely within an official reporting context.