The money revolution won't be televised: It may not even occur

It's too much of a public good and national-security concern to be left to private actors. It will stay within the state's purview

- NOURIEL ROUBINI

What does the future hold for money and payment systems? While it will surely feature unprecedented technologies, foreseeing the full picture requires historical context.

Traditionally, money and payment systems have run on a combination of base money (issued by a central bank) and private-sector money, typically issued by commercial banks through demand deposits, credit cards and so forth. Since newer fin-tech payment systems such as Alipay, WeChat or PayPal are still linked to bank deposits and credit cards, they represent evolution, not revolution.

As for Bitcoin and other decentralized crypto assets, none has become a currency because none is a unit of account, scalable means of payment, stable store of value or a numeraire (a benchmark for other similar assets). El Salvador went so far as to declare Bitcoin legal tender, but, at best, some 5% of transactions for goods and services are settled with it.

True, with the Trump administration creating a Strategic Bitcoin Reserve and with more institutional investors adding it to their portfolios, some believe that Bitcoin will become a store of value over time. But this has yet to be tested.

What other possibilities do distributed-ledger technologies (DLTs) create? Leaving aside crypto assets, which will remain volatile tokens for speculative activities, three other options have emerged: central bank digital currencies (CBDCs), stablecoins and tokenized deposits.

Fears that CBDCs would disintermediate banks or facilitate bank runs in times of financial panic have diminished, now that limits are likely to be imposed on CBDC balances. In most cases, central banks will aim only to provide a public safe asset for people's digital wallets, rather than an alternative to private-sector payment systems; and most CBDCs will not be either 'programmable' or interest yielding.