Third Central Bank of the Future Paper released: Building the Payment System of the Future
Advancing payment system technology has made many financial transactions easier and more convenient, but can it also make economic participation more accessible? The Center on Finance, Law & Policy is excited to announce the third paper in our Central Bank of the Future Series" "Building the Payment System of the Future: How Central Banks Can Improve Payments to Enhance Financial Inclusion," written by Ford School of Public Policy Dean Michael Barr, Gates Foundation Senior Research Fellow Adrienne Harris, Columbia Law Academic Fellow Lev Menand and Center on Finance Law and Policy Research Assistant Michael Xu.
"This working paper, our third, explores how central banks can design more inclusive payment systems. Payment systems are critical infrastructure that generate positive network externalities. The more people who use them, the better off everyone using them is. They allow households, businesses, governments, and nonprofits to clear and settle transactions. Consumers use payment systems when they swipe their credit or debit cards; homeowners use them when they write checks; and businesses use them when they wire money.
Many have noted the link between payment systems, digital innovation, and access to financial services. New technologies have the power to be a remarkable equalizer, allowing marginalized groups to enter the mainstream payment system and access lower-cost services. But they can also be a catalyst for further inequality – excluding lower income people through excessive fees and nonpecuniary barriers."