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An Interoperability Framework for Payment Systems

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Abstract

Novel payment systems based on blockchain networks promise to redesign financial architecture, but a notable concern about these systems is whether they can be made interoperable. This concern stems from the concept of the “singleness of money”—that payments and exchange are not subject to volatility in the value of the money itself. Volatility and speculation can arise from the payment medium, which may have speculative characteristics, or from frictions that undermine the ability of one or more payments systems to interoperate. In this two-part series, we outline a framework for analyzing payment system interoperability, apply it to traditional and emerging financial architectures, and relate it to the ability of the payment systems to maintain singleness of money.

Suggested Citation

  • Jon Durfee & Michael Junho Lee & Joseph Torregrossa, 2025. "An Interoperability Framework for Payment Systems," Liberty Street Economics 20250327a, Federal Reserve Bank of New York.
    • Handle: RePEc:fip:fednls:99737
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    File URL: https://libertystreeteconomics.newyorkfed.org/2025/03/an-interoperability-framework-for-payment-systems/
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    More about this item

    Keywords

    interoperability; payments; singleness of money; central banks;
    All these keywords.

    JEL classification:

    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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