BIS Paper Reckons With P2P Payments, Tokenized Securities, Central Bank Digital Currencies

"The most transformative option for improving payments is a peer-to-peer arrangement that links payers and payees directly and minimises the number of intermediaries," said the BIS chief Agustín Carstens.

Researchers at the Bank for International Settlements are grappling with the future of payments - so much so that their newest quarterly report, released Sunday, is entirely dedicated to what that potential revolution holds.

In its 138-page look at what lies beyond the financial horizon, the Swiss-based institution reckoned with coming trends that may well shape tomorrow's payments infrastructure: tokenized securities, central bank digital currencies, cross-border payments and peer-to-peer innovations.

BIS Head of Research Hyun Song Shin said "The pace of change and potential for disruption" have made examining new forms of payment systems a priority for policymakers.

"The most transformative option for improving payments is a peer-to-peer arrangement that links payers and payees directly and minimises the number of intermediaries," BIS General Manager Agustín Carstens said in his introduction to the report.

Researchers' postulations on securities tokenization was just one future-forward feature of a quarterly report fully dedicated to potential revolutions in international payments.

BIS does not definitively answer those questions in its section on "The technology of retail central bank digital currency," but its researchers do plot out the considerations each would involve.

Consensus mechanisms often slow down transaction throughput, spelling potential trouble for a retail-facing system that must shoulder millions of often small-dollar payments a day.

Wholesale systems - large-scale payments between banks and key players - may fit easier into some of DLT's consensus limitations, the researchers say.

Bankers continue to argue over DLT and CBDC. As the BIS researchers note, existing trials have "not always been encouraging," with some central banks stating publicly their fears that DLT is not the salve some make it out to be.