Central banks and payment systems: Past, present and future

Central banking and payment systems – mechanisms that enable the transfer of monetary value – are inextricably linked. In the past, institutions that developed into modern central banks stood at the top of the inter-bank payments hierarchy, providing the ultimate settlement asset exchanged by commercial banks when settling payments with each other. At present, modern central banks devote a considerable proportion of their resources to operating, overseeing and influencing developments in payment systems. In the future, innovations in payment system technology might permanently change the role of central banks, possibly even leading to their demise.