Building the Payment System of the Future: How Central Banks Can Improve Payments to Enhance Financial Inclusion

30 Pages Posted: 31 Jul 2020

See all articles by Michael S. Barr

Michael S. Barr

University of Michigan Law School; University of Michigan at Ann Arbor - Gerald R. Ford School of Public Policy; University of Michigan, Center on Finance, Law, and Policy

Adrienne Harris

University of Michigan at Ann Arbor - Gerald R. Ford School of Public Policy; University of Michigan, Center on Finance, Law, and Policy

Lev Menand

Columbia Law School

Wenqi (Michael) Xu

University of Michigan, Center on Finance, Law, and Policy

Date Written: July 31, 2020

Abstract

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.

Keywords: payment systems, finTech, financial inclusion, cryptocurrencies, Central Bank Digital Currencies (CBDC), stablecoins, real-time payments, remittances, case studies, China, Kenya, Philippines, emerging markets, emerging technologies

Suggested Citation

Barr, Michael S. and Harris, Adrienne and Menand, Lev and Xu, Wenqi (Michael), Building the Payment System of the Future: How Central Banks Can Improve Payments to Enhance Financial Inclusion (July 31, 2020). Available at SSRN: https://ssrn.com/abstract=3664790 or http://dx.doi.org/10.2139/ssrn.3664790

Michael S. Barr (Contact Author)

University of Michigan Law School ( email )

625 South State Street
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University of Michigan at Ann Arbor - Gerald R. Ford School of Public Policy ( email )

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University of Michigan, Center on Finance, Law, and Policy ( email )

735 S. State Street, Suite 5211
Ann Arbor, MI 48109
United States

Adrienne Harris

University of Michigan at Ann Arbor - Gerald R. Ford School of Public Policy ( email )

735 South State Street, Weill Hall
Ann Arbor, MI 48109
United States
734-615-8684 (Phone)

University of Michigan, Center on Finance, Law, and Policy

735 S. State Street, Suite 5211
Ann Arbor, MI 48109
United States

Lev Menand

Columbia Law School ( email )

435 West 116th Street
New York, NY 10025
United States

Wenqi (Michael) Xu

University of Michigan, Center on Finance, Law, and Policy

735 S. State Street, Suite 5211
Ann Arbor, MI 48109
United States

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