Working Paper #3: Building the Payment System of the Future

July 2020
Michael S. Barr, Adrienne A. Harris, Lev Menand, Michael Xu

This brief is part of the Central Bank of the Future Project (“CBOTF” or the “Project”), which is designed to identify ways that central banks can improve access to financial products and services for underserved communities. The Project engages with central bankers, regulators, futurists, financial institutions, fintechs, consumer and community organizations, and other stakeholders to develop technologies, processes, and tools that enhance inclusion. The Project also works to find ways that businesses and nonprofits can support official sector efforts. One output is a series of working papers and policy briefs focused on specific topics.

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.