Policy Brief No. 200 — March 2025
Policy Pathways for Integrating Fast Payment Systems with Digital Currencies S. Yash Kalash
Key Points → Cooperation is key: The potential for coexistence between fast payment systems (FPSs) and digital currencies presents a significant opportunity to enhance the global digital financial ecosystem. → Unified regulatory framework: Harmonizing regulations for FPSs and digital currencies is crucial for compliance, security and seamless integration. → Technological interoperability: Investments in digital infrastructure and the development of open application programming interfaces (APIs) will support communication between FPSs and blockchain platforms. → International cooperation: Global standards and cross-border agreements are essential to enable smooth international transactions using both systems. → Public-private partnerships (PPPs): Collaboration between governments, central banks, and fintech and blockchain developers will accelerate innovation and ensure a secure, inclusive global financial ecosystem.
Introduction The rapid evolution of digital finance has fundamentally reshaped how transactions are conducted, fostering more inclusive, efficient and cashless economies. Among the key developments in this domain are FPSs such as India’s Unified Payments Interface (UPI) and Brazil’s Pix, which have revolutionized everyday transactions by offering realtime payments, accessibility and low-cost solutions. These systems have greatly contributed to financial inclusion, providing millions with access to seamless digital transactions and pushing both India and Brazil toward predominantly cashless economies. The emergence of digital currencies, including stablecoins and central bank digital currencies (CBDCs), has introduced a new wave of financial innovation. These digital assets address a distinct need and provide benefits that extend beyond the capabilities of fast payments. Whether backed by stable assets or issued by central banks, digital currencies are based on two core tenets of decentralization (though their adherence to these tenets can differ from case to case) and programmability through the integration of smart contracts. Thus, unlike FPSs, digital currencies promise to streamline cross-border payments, enhance monetary control, drive economic integration and, in the case of stablecoins, provide a mechanism to