Building a Harmonised Framework for Digital Money and Payment Rails

The accelerating evolution of digital assets and payment systems is compelling central banks and regulators to rethink the foundations of the global financial system, with a particular focus on harmonisation and interoperability.

Recent discussions have placed digitalisation at the heart of central banking, highlighting enormous opportunities to enhance efficiency and accessibility. As money and assets move onto digital infrastructure, the prospect for cross-border payments continues to expand rapidly, with some forecasts predicting that cross-border flows could surpass $290 trillion by 2030. Central banks, such as the Bank of England, play a unique dual role in this space: they not only provide risk-free settlement assets but also oversee the platforms that facilitate these transactions. The ongoing push towards synchronising settlement across various ledger types—including experiments with wholesale Central Bank Digital Currencies—shows an active commitment to keeping innovation in step with financial stability.

A central theme in these efforts is interoperability: ensuring users can seamlessly convert between different forms of money and assets across systems and borders. Without a harmonised approach, new digital payment systems risk fragmenting into isolated "walled gardens," making movement of funds more difficult and potentially amplifying instability in times of crisis. Developing harmonised technical standards—possibly culminating in unified ledger structures—has been flagged as a crucial step, with coordinated public sector leadership essential to drive this system-wide connectivity. Regulatory harmonisation at an international level becomes especially important as the lines between jurisdictions blur in the digital realm.

Regulating stablecoins, particularly those with potential to become systemic in facilitating everyday payments, is an area of urgent focus. The Bank of England has pioneered early frameworks rooted in the principle of “singleness of money”—the guarantee that all forms of money, digital or traditional, remain fully interchangeable at par. This is critical for financial stability and public trust. Industry feedback, however, has pointed to challenges in aligning new regulatory models with existing business practices and coping with divergences across international regimes. In response, future proposals aim to differentiate between types and scales of stablecoins, balancing flexibility for innovation with the need for robust guardrails that can adapt as the market evolves. The importance of regulatory sandboxes—allowing real-world experimentation under close supervision—has also been underscored as vital for learning and adaptation.

As digital assets and new forms of money gain prominence, a collaborative international approach to regulatory standards will be essential to realise the full benefits of modernised, efficient, and resilient payment systems. By pursuing harmonisation without demanding identical rules, authorities can foster safe innovation, support industry growth, and maintain the trust that underpins the global financial system.