The following remarks were delivered by Under Secretary for Domestic Finance Nellie Liang at the Peterson Institute for International Economics Conference on Rethinking Economic Policy: Steering Structural Change
As Prepared for Delivery
Recent developments in consumer preferences, technology, and new payments firms have coalesced to create a unique opportunity to upgrade U.S. money and payments, with the potential to significantly benefit the financial system and economy. First, consumer preferences for electronic commerce continue to increase and use of mobile payments has stepped up dramatically since the Covid-19 pandemic. Second, technological advances, such as lower-cost computing and cryptography, have the potential to make payments faster, more efficient, and available in real-time. Third, nonbank financial firms that specialize in providing innovative payment services have been growing rapidly. But the regulatory framework has not kept pace, which may be limiting innovation and competition, and raising risks for the integrity of the payments system and the singleness of currency, which are critical to trust in the U.S. money and payment system.
This paper argues that given these developments, U.S. policymakers should engage purposefully to modernize the payments technology and update the regulatory frameworks that govern U.S. money and payments systems.[1] In addition to a more efficient and resilient payment system, modernizing payments could create other substantial economic benefits, including more opportunities for new business models, advancing financial equity, and reinforcing U.S. global financial leadership and its related economic and national security benefits. Fast payment systems (FPSs) make it possible to initiate and transfer funds across banks in near-real time, and tokenization makes it possible for digital money to be transferred peer-to-peer on a shared ledger in a single all-or-nothing step. A new federal regulatory framework that simplifies the existing state-level regulatory patchwork could reduce risks to the payments system, while also promoting adoption of FPSs and greater competition and innovation among banks and nonbanks. Importantly, the U.S. also should be engaged in the global discussion about the future of payments, regardless of the system (or systems) it ultimately adopts, given the intention of many other countries to embrace the development of new payment technologies to further their own economic and geopolitical objectives.
This paper briefly describes some recent trends in consumer payments, new fast payments and tokenization technologies, as well as potential benefits and costs of adopting the new technologies. It also outlines principles for an updated regulatory framework to address potential financial stability risks of runs and the singleness of currency, as well as incentivizing more and fairer competition for consumer payments.
I. Consumer Payments
In the United States, consumers’ use of electronic payments has been increasing as use of cash has been declining. Between 2017 and 2023, the share of cash payments fell from 31 percent to 16 percent, while the share of payments with credit and debit cards rose from 49 percent to 62 percent (Bayeh, Cubides, and O’Brien, 2024).[2] For person-to-person payments, the decline in the use of cash over this same period is more notable, falling from 75 percent to 42 percent, while the use of a payment app rose from 12 percent to 50 percent.[3]
Technology is changing the way that consumers experience the payment system. New entrants, including BigTechs like Apple, Google, and Meta, provide user-friendly overlays on cards and other forms of bank-based payments. Electronic money, or e-money, also is a popular retail payments option but relative to a payment app takes the additional step of holding customer balances IMF, 2021). Prominent e-money services include PayPal and Venmo, and in other jurisdictions, Alipay, WeChat Pay, and m-pesa. Like a bank deposit, a holder of an e-money instrument has a liability of the issuer. Generally, this liability is not insured and not used to the same extent to fund commercial loans. Total e-money volumes remain small in comparison to bank-based payment methods: In 2022, the total value of U.S. payments made through nonbank payment services (including apps and e-money options) was estimated to be between $893 billion and $1 trillion, while total value of card payments in 2021 was estimated to be $9.43 trillion.[4]
However, nonbank payments could scale rapidly because of their ease of use and network effects. Already, the share of consumers who made at least one mobile payment in a month rose from about 25 percent in 2017 to 70 percent in 2023, an increase accelerated by the Covid pandemic (Foster, Greene, and Stavins, 2024).[5] Moreover, the share of consumers adopting mobile payment accounts, such as PayPal, Venmo, Zelle, CashApp, increased from 66 percent to 72 percent from 2022 to 2023.[6][7]
The wholesale payment systems – the inter-bank settlement layer that supports consumer payments – is also evolving. One change is that the Federal Reserve has recently proposed to extend the operating hours of FedWire and the National Settlement Service to 22x7x365.[8] This change could lead to further innovation and efficiency if banks can adjust the amount of liquidity they would need to pre-position because differences would be reduced in operating hours between the two systems.
The U.S. money and payments system has significant strengths. These systems have “supported over a century of U.S. economic and financial leadership,” and processed a large volume of transactions in a secure and reliable manner (U.S. Department of the Treasury, 2022). However, consumers in the U.S. spend substantially more on payment services per transaction than consumers in many other countries. For example, debit interchange fees are about 0.8 percent of a transaction in the U.S., higher than the 0.2 to 0.3 percent range in Canada and Europe (Duarte et al, 2022). In addition, cross-border payment costs are significantly higher than domestic payments. The average cost of sending a $200 payment from the United States to Mexico is 4.87%, with costs ranging from 1.9% to 17.5% and transfer time ranging from less than hour to 5 days.[9] The U.S. also has a higher percentage of un- or under-banked households than do other G-7 countries (Jackson and Massad, 2022), which limits their access to payment services.
II. Fast Payments Systems (FPS) and Tokenization
Non-cash payments typically involve a time gap between the initiation of the payment by the payor or payee, and the transfer of funds to discharge the payment obligation. This lag means that payments do not settle in real time, which creates counterparty risks that are heightened by information asymmetries, and requires reconciliation to ensure consistency between bank balance sheets. These frictions, discussed in Carstens (2023), contribute to making payments expensive, slow, error-prone, and inaccessible to certain users. This formulation of the source of payment inefficiencies [, as rooted in the siloed nature of bank balance sheets,] suggests two technology-based options for improving the current situation.
First, fast payment systems can improve the efficiency of the infrastructure for transferring value across banks. End-users in retail fast payment systems generally participate through an intermediary, which may be a bank or, in some cases, a nonbank payment service provider. A key ingredient of these systems, which supports the ability of payments intermediaries to make fast payment services available to end-users, is the ability for intermediaries to transfer value among themselves in (near) real-time. Retail fast payment systems, such as the recently-introduced FedNow by the Federal Reserve, would make it possible to initiate and transfer funds in real-time or near real-time 24x7x365. FPSs reduce counterparty settlement risk, and hence costs from information asymmetries between payors and payees, and also allow payees to more quickly respond funds received. Establishment of FPSs globally has grown in recent years and now is widespread. The FSB reports that 119 jurisdictions worldwide have FPSs in place; moreover, many are pursuing interlinking their systems with others (Frost et al, 2024).
A second option is to transition away from the current system of data silos at each bank, to a new system in which tokenized money resides on one or more shared ledgers. Tokenized money is digital money that can be transferred from peer-to-peer on a shared ledger. It could include tokenized deposits issued by banks, well-regulated stablecoins issued by nonbanks, and a digital settlement asset issued by the central bank. In this context, when a payor makes a payment to a payee, the payor and payee’s respective balances on the ledger are updated in a single all-or-nothing step, which means that payments can occur more quickly, at lower cost, and with less risk of error.
Both of these technologies could be pursued at the same time. Fast payment systems are an option for retail payments that could be adopted more widely in the near term. Tokenization of money and payments is more ambitious and requires more development but would likely be more transformational, especially if tokenization of securities were to become more widespread.
III. Potential Benefits of Modern Technology for Payments
In this section, we discuss the potential benefits of fast payment systems and tokenization in terms of benefits for payments, and then in terms of furthering other economic and financial policy objectives (summarized in Table 1). Also, because both technologies are capable of producing substantial benefits, when we discuss tokenization, we discuss its marginal benefits relative to fast payment systems. In addition, while tokenization may be even more effective than fast payment systems in advancing some objectives, it could also introduce some incremental risks, as discussed in the following section.
A. Efficiency and Resilience of Payments
Efficiency
In the United States, there are two FPSs that enable depository institutions to conduct value transfers: The Clearing House’s RTP Network, which was launched in 2017, and the Federal Reserve’s FedNow Service, launched in 2023. While access to these systems is limited to depository institutions, nonbank fintechs are developing overlays that could make these systems more valuable to their users. For example, Plaid recently announced that it would launch a service to help Plaid customers determine whether “an account is eligible for instant payouts,” and if so, “dynamically rout[e] transactions between the FedNow Service and RTP” (Plaid, 2023).
Thus far, uptake of retail fast payments in the United States has been limited. FedNow was introduced with 35 participating institutions, and grew to about 470 in February 2024.[10] However, the majority of participating institutions have signed up for receiving rather than sending payments, a signal that FedNow is not yet being used for a broad range of payment applications.
However, experience in other jurisdictions – including Brazil, India, and Thailand – shows that use of FPSs can grow rapidly. An empirical study of FPSs in 13 countries with widespread adoption found that the uptake by consumers is greater when there are more types of use cases (including cross-border payments), nonbank PSPs are eligible to participate in the FPS, and when the FPS is owned and operated by the public sector (Frost et al, 2024).
FPSs can provide a non-cash payment option that may be less expensive, and also support a wider range of use cases (i.e., person-to-person, person-to-business, business-to-person, and business-to-business), than alternatives such as credit and debit cards. Lower FPS costs could lead to lower costs for consumers. For example, Duarte et al (2022) found that merchants paid 0.22% for transactions using PIX, Brazil’s FPS. The authors found that comparable fees for credit and debit cards are approximately 2.2% and 1.1% in Brazil (and 1.7% and 0.8% in the United States), respectively. Given that the Fed is charging depository institutions $0.045 for interbank settlement of a FedNow transaction, instant payments could enjoy a similar pricing advantage in the United States, though the ultimate price to end-users will depend on the fees that banks charge their customers for the service.
Efficiencies are evident in other countries from interlinking FPS for cross-border payments, with payments processed within seconds at lower prices and enhanced transparency. For example, the Bank of Thailand and MAS Singapore have a cross-border arrangement, which has led to a cost reduction from $12 to $30 a payment to $5 a payment, and the time has been reduced from two days to two seconds.
Compared to fast payment systems, tokenization allows for a more streamlined payment process. Ownership of tokenized money is recorded on a shared ledger, which is accessible to all participants of that system. Tokenized money could be transferred on the shared ledger without requiring the issuer of the monetary instrument to validate the transaction. When a payor makes a payment to the payee, the payor and payee’s respective balances on the ledger are updated in a single step. This more streamlined process for transferring tokenized money likely creates advantages in cost, speed, reliability, and transparency. While these advantages may not be necessary for all payments, there may be some payments where they are critical – e.g., micropayments or payments that are highly time-sensitive.
The existence of a shared ledger also supports novel functionalities. These functionalities include atomic settlement, “in which two assets are exchanged simultaneously, such that the transfer of one occurs only upon transfer of the other” (Bank for International Settlement, 2022); programmability, meaning the ability to deploy computer code that can read and automatically modify the state of the ledger upon the occurrence of certain conditions; and composability, meaning the ability to combine smart contracts and transactions.
Current use of tokenized money and payments is extremely limited in the U.S. While most stablecoins are pegged to the U.S. dollar (market capitalization of $165 billion as of May 1, 2024),[11] some of these are issued offshore, and provide limited issuance and redemption services to U.S. persons. Stablecoins currently are primarily used to buy and sell other crypto assets, rather than to purchase goods or services, though some nonbank PSPs have begun to offer a stablecoin to make purchases. Certain U.S. banks are exploring tokenized deposits, and are using deposit tokens on internal platforms or in more experimental settings for corporate customers to improve liquidity management or reduce cross-border payment costs (Oliver Wyman and J.P. Morgan, 2023). Central banks and private firms also are engaged in initiatives related to tokenization for wholesale payments. For example, the BIS recently launched Project Agora, which will involve seven central banks and private firms, to explore how tokenization could improve cross-border payment systems (Bank for International Settlement, 2024).
Greater operational resilience
The development of alternative systems also could improve the operational resilience of the payments system, which is critical for the functioning of the financial system. For example, fast payment systems might substitute for ACHs under certain circumstances, and one fast payment system (e.g., FedNow or TCH RTP) might substitute for another. The extent of these resilience benefits depends on the ease with which payments can be transferred from one system to another if there were a disruption.
Tokenized money and payments could offer greater security and resilience benefits compared to fast payment systems for two reasons. First, tokenized money and payments make use of more advanced cryptographic techniques and distributed database structures that make them more secure than payment systems that such as fast payment systems that are based on more traditional technologies. Second, tokenized money and payments can support both wholesale and retail use cases, whereas current adoption of fast payment systems are primarily aimed for retail payment services.
B. Other Economic and Financial Benefits
Create more opportunities for new business models
Less efficient money and payment systems may have significant “hidden costs” because potentially valuable transactions do not occur (Carstens, 2023). For example, micro-payments currently may be currently priced out of the market by minimum high fees of credit and debit card transactions. Similarly, very short-term loans are impractical if value is not transferable in real-time. In recent years, sales data gathered by payment apps from e-commerce, such as online small businesses and ride-share drivers, have been used to create credit profiles that allow payments firm to offer more-tailored small business loans.
A more efficient payment system could support new forms of commerce that are qualitatively different or more difficult to envision today. As an example, Schnabel and Shin (2004) describe significant increases in trade and commerce in the 1700s after paper ledgers replaced metal coins for exchange, and allowed for the creation of relationship-specific capital, forming the basis for a key financial innovation – acceptance loans – which ultimately allowed capital to flow across regions through the merchant banking relationships. Other types of innovations in business models – e.g., paying for a single article or listening to a song once – that are not practical today could evolve.[12]
Either FPSs or tokenization may support such use cases by providing a more efficient and less expensive means of payment. Tokenization may have additional benefits by supporting a wider range of functionality and programmability.
Advancing financial equity
Fast payment systems could help to advance financial equity by reducing the incurrence of bank account fees, such as for overdrafts or insufficient funds, which is especially important for lower-income households who live paycheck-to-paycheck. In the U.S., lower income consumers are less likely to have a bank account, and are more likely to pay overdraft, bounced check, or late fees when they do have an account (Shy and Stavins, 2023). FPSs, which would allow businesses and households to receive and transfer funds more quickly, could help avoid these fees.
In addition, shorter settlement times could reduce credit risk involved in providing payment services, allowing payment service providers to provide services at lower cost and expand access to payment services. Recent research on the adoption of FPSs in Brazil, India and Kenya finds increases in household income and small business creation (Dubey and Purnanandam, 2023), smoother consumption (Jack and Suri, 2014), and improved access to credit (Berg, et al, 2020).
Compared with FPSs, the more streamlined process with tokenized money could further reduce payment costs and improve access. Further, unlike FPSs, tokenized money introduces the possibility of money being transferred peer-to-peer and without a bank account. This is especially relevant in the United States, which has a higher percentage of underbanked persons compared to other G7 countries, creating room for tokenized money and payments to contribute to financial inclusion.
Supporting the global role of the dollar
The U.S. benefits from the prominence of the dollar in the global financial system, including lower borrowing costs and the effectiveness of national security tools. The global role of the dollar is grounded in important structural factors, including openness of U.S. financial markets, strong property rights, and respect for rule of law, which support the strength and stability of the U.S. economy. But other countries are taking steps to upgrade the global functionality of their currencies, and if their currencies were to become significantly more convenient to use and multi-lateral arrangements are adopted that do not include the dollar, the use of the dollar could be eroded (Prasad, 2021).[13] In this context, upgrading the payment rails to support use of the dollar in cross-border arrangements could help to preserve the dollar’s global role, support U.S. national security tools, and reduce fragmentation in the international financial system.
FPSs could help to reduce cross-border transaction costs and reinforce the global role of the dollar. Establishing bilateral and multi-lateral linkages for cross-border payments with other countries with modern payment systems would facilitate greater use of the dollar in international transactions. TCH has explored interlinking TCH RTP with EBA Clearing’s RT1 service to provide a real-time U.S. dollar/EU corridor. Treasury Secretary Yellen announced that the U.S. was discussing with Mexico the possibility of interlinkage or other ways to improve connectivity between the U.S. and Mexican payment systems (Yellen, 2023).
Other countries are actively establishing interlinkages to improve cross-border payments. Five ASEAN countries are currently working to establish a multi-lateral FPS arrangement, and the BIS is exploring multilateral RTGS interlinkages through Project Nexus. FPS interlinkages, as between the Bank of Thailand and MAS Singapore, have led to payments processed within seconds, lower prices, and enhanced transparency.
Similarly, if tokenization initiatives lead to the adoption of widely-used cross-border payment platforms, the ability to use the dollar on such platforms could help to reinforce the dollar’s global role. Furthermore, the functional advantages of tokenized money and payments (e.g., atomic settlement, programmability, composability) could also be important to support the global role of the dollar over time, especially for wholesale cross-border transactions.
IV. Potential Risks of New Money and Payment Systems
New technologies, from either fast payment systems or tokenization, introduce certain risks, discussed briefly below.
Fraud and errors.
The near real-time settlement speed increases the need for ex-ante fraud and error prevention and clear rules for allocating loss in the event of fraud or error. With respect to misaddressed transfers or fraud, intermediaries that provide fast payment services to their customers are required to comply with consumer protection rules, including the Electronic Funds Transfer Act for retail transactions, and the UCC for wholesale transactions.
Peer-to-peer payments involving tokenized money may create a heightened risk of fraud and errors because, unlike with fast payments, consumers may have limited, or no, recourse to an intermediary if things go wrong. Moreover, control over tokenized money typically depends on use of cryptographic keys that, if lost, forgotten or destroyed, are not recoverable (U.S. Department of the Treasury, 2022b). Policymakers may want to explore options to address any gaps in consumer protection.
Liquidity risks
Banks that offer FPS to their customers may experience more volatile round-the-clock liquidity demands from 24x7 near-real time settlement. Limits on the size of transactions, such as already exist for FedNow, and regulatory requirements to hold higher liquidity buffers are options to mitigate this risks.
Macrofinancial risks
Depending on how they are designed and regulated, tokenized money could potentially undermine the “singleness of the currency.” The singleness of the currency occurs when different forms of money used in the economy are treated as fungible, and is critical to the smooth functioning of the payment system. Garret and Shin (2023) argue that tokenized money that circulates as a “bearer asset”[14] is inconsistent with the singleness of the currency, because bearer assets may trade at prices that deviate from par.
In addition, programmable money could give rise to new financial stability risks. For example, occurrences in stress in one part of the financial system trigger conditions in smart contracts that create stress in other parts of the system. Avoiding contagion under these circumstances might require new kinds of circuit breakers or new lender-of-last-resort tools that can be deployed more rapidly or with greater automaticity.
Illicit finance risks
Tokenized money and payments may present challenges for the current approach to AML/CFT screening. For example, while intermediaries that issue, redeem or transmit most stablecoins are generally required to register as money service businesses and comply with requirements under the Bank Secrecy Act (BSA), the fact that stablecoins can be transferred without the involvement of a financial institutions could limit the collection of information used to identify illicit financial activity (U.S. Department of Treasury, 2022). Policymakers may consider exploring ways to gather information regarding transactions that do not involve the issuer.
V. Modernizing the domestic regulatory framework to promote responsible innovation
The benefits of technological advances are substantial, but technology on its own cannot ensure these gains will be achieved. To promote adoption, we should also adjust the payments regulatory framework. Nonbank PSPs have been growing and increasing competition and innovation, but they can also raise risks as issuers of “nonbank money.”
In light of these changes, and as recommended in Treasury’s Future of Money and Payments report, the financial regulatory framework for nonbank PSPs should be updated. Today, nonbank PSPs are regulated as money services businesses, largely at the state level. These state level frameworks were first introduced in the 1930s for wire services such as Western Union, and designed to protect customer funds during the relatively brief amount of time it took customers to travel between branches (Awry, 2020). But as the size and significance of nonbank PSPs grows, and to the extent they hold greater amounts of customer balances on their own balance sheet, a failure or disruption of a nonbank PSP could threaten financial stability, while the disruption of payment systems operated by nonbank PSPs could undermine the efficiency and integrity of payments. A federal payments framework could help to ensure that risks associated with nonbank PSPs are addressed on a comprehensive and consistent basis. As important, a federal payments framework could simplify the existing state regulatory patchwork and, by reducing barriers to entry, promote competition and innovation.
A federal payments framework would apply to nonbank entities that issue, hold, or transfer money.
While it is beyond the scope of this paper to propose the details of a federal payments framework, the principle of “same risk, same regulation” provides guidance in two areas.[15] First, the framework should be designed to support a degree of confidence in nonbank money comparable to commercial bank money. Under a framework without deposit insurance or its equivalent, nonbank money should be fully backed by cash or cash equivalents. Moreover, holders of nonbank money should have a clear claim to the backing assets in case of insolvency. Second, a federal payments framework should ensure that nonbank payment systems meet security, resilience, privacy, and AML/CFT standards comparable or superior to other issuers of money.
If nonbank PSPs were made subject to oversight in a federal framework, the Federal Reserve should give consideration to providing them with access to Federal Reserve accounts and payment systems. Supervised nonbank financial institutions have direct access to central bank RTGS in approximately 40 percent, and to fast payment systems in approximately 20 percent of, advanced economy jurisdictions (FSB, 2023). Experience in other jurisdictions suggests that giving nonbanks permission to participate in a country’s fast payment system supports usage, perhaps because nonbank PSPs increase competition for payment services. Access to central bank accounts would also facilitate interoperability between bank and nonbank payment systems. At the same time, the benefits of expanding access to Fed services would need to be weighed against potential unintended consequences for financial stability, intermediation of credit, or implementation of monetary policy.
The motivation for a federal payments framework is not based solely on advances in tokenization. Indeed, a primary effect could be to encourage greater adoption of FedNow by banks and nonbanks if appropriate federal regulatory oversight were to allow nonbanks to have access to Federal Reserve accounts and payments systems. Nonetheless, appropriate stablecoin legislation, such as proposed by the PWG report, that would include requirements regarding the assets used to back the stablecoin as well as operational risk standards, would address an important subset of the objectives for a broader payments regulatory framework for account-based e-money issuers.
VI. Conclusion
To summarize, adoption and R&D of new payment technologies – FPSs and tokenization -- is accelerating.
The U.S. should prioritize modernizing payments with both technologies and update the regulatory framework to reduce risks and promote adoption of innovation. Potential gains are significant and risks of not modernizing are rising. Modernization and greater efficiency supports further business model innovation and advances equity, but importantly supports U.S. global financial leadership through cross-border payment arrangements and use of economic and national security tools. Finally, while any future tokenized money and payments system likely would be built on distributed ledger technology, it would still need to be supported by many of the same factors that support the smooth functioning of today’s systems. These factors include central bank money as a safe wholesale settlement asset and consistent prudential oversight of banks and other private sector payment intermediaries.
The table referenced in these remarks is available here.
References sourced throughout these remarks are available here.
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This paper is based on a working paper Jordan Bleicher and Nellie Liang, “Navigating Change in US Money and Payments.” I thank Mary Watkins for her assistance and very helpful comments and suggestions.
[1] U.S. policymakers have already started this work. In 2022, Treasury published The Future of Money and Payments in response to a Presidential Executive Order on Digital Assets. The report considered central bank digital currency, stablecoins, and retail fast payment systems, and made a number of recommendations, including encouraging use of fast payment systems, establishing a federal framework for payments regulation, and prioritizing efforts to improve cross-border payments (U.S. Department of the Treasury, 2022). In addition, in 2021, the Presidents Working Group on Financial Markets, together with the OCC and FDIC, identified risks of stablecoins and proposed regulations to manage the risks while allowing for possible benefits (President’s Working Group on Financial Markets, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency, 2021). The Federal Reserve issued a paper examining the potential costs and benefits of a central bank digital currency and asked for public comments (Board of Governors of the Federal Reserve System, 2022).
[2] 2024 Findings from the Diary of Consumer Payment Choice, Federal Reserve Financial Services
[3] Ibid.
[4] See Issue Spotlight: Analysis of Deposit Insurance Coverage on Funds Stored Through Payment Apps | Consumer Financial Protection Bureau (consumerfinance.gov), Federal Reserve Board - Federal Reserve Payments Study (FRPS), Apple Cash, Cash App, Venmo, Zelle P2P Payment Apps Compared - Consumer Reports. There is no consistent reporting of customer balances held on the balance sheets of e-money providers.
[5] 2023 Survey and Diary of Consumer Payment Choices, Federal Reserve Bank of Atlanta, Research Data Report.
[6] Ibid
[7] Data on specific firms illustrate rapid growth. For example, in the first quarter of 2024, PayPal reported 14% growth in global payment volumes and an 11% increase in the number of transactions from the first quarter of 2023, and reached 427 million users (Q1 24 PYPL Earnings Release (q4cdn.com), At Venmo (which was purchased by PayPal in 2013) estimates of payment volume in the US increased from $101 billion in 2019 to almost $300 billion in 2023, and users increased from 40 million in 2019 to 85 million in 2023 (Venmo Networth, Revenue Valuation & Stats 2024 | Priori Data). CashApp grew 20 percent in 2023, to 23 million active users (Block (SQ) Q4 2023 Shareholder Letter (q4cdn.com).
[8] https://www.federalreserve.gov/newsevents/pressreleases/bcreg20240503a.htm
[9] Sending money from United States to Mexico - Remittance Prices Worldwide (worldbank.org)
[10] https://www.frbservices.org/financial-services/fednow
[11] https://www.theblock.co/data/stablecoins/usd-pegged
[12] For related observations, see Dixon (2024). See also Sarah Breeden (2024).
[13] See also “Digital currencies: The US, China, and the World at a Crossroads,” edited by Darrell Duffie and Elizabeth Economy, the Hoover Institution, Mar. 2022.
[14] Garret and Shin (2023) identify three characteristics of “bearer assets”: (i) the holder of the instrument is the owner; (ii) ownership is transferred by transferring the instrument; and (iii) the issuer keeps no record of ownership. In contrast with Garret and Shin, Bank of England (2023) suggests, in the context of discussing stablecoins that trade on the secondary market, that regulatory requirements could be designed that remove the incentive to trade tokenized money at prices that depart from par.
[15] See Cunliffe (2023) for similar suggestions.