Financial institutions face mounting pressure to move funds across borders with greater speed and transparency while operating within strict regulatory frameworks. These pressures are increasingly shaped by a shared global mandate: since 2020, the G20 Roadmap for Enhancing Cross-Border Payments has set explicit, time-bound targets to improve cost, speed, access and transparency across wholesale, retail and remittance flows. Progress remains uneven, particularly in wholesale settlement and end-to-end visibility, and banks are being pushed towards structural change rather than incremental optimisation. That challenge is not purely technological. Global coordination efforts such as the BIS Innovation Hub’s Project Nexus frame interoperability as a systemic issue spanning legal frameworks, regulatory alignment and institutional design, rather than a problem that can be solved through new rails alone. By focusing on how domestic instant payment systems can be linked across jurisdictions, Project Nexus reinforces the reality that fragmentation in cross-border settlement is institutional and regulatory as much as it is technical. Banks are responding by redesigning settlement infrastructure so that compliance, governance and liquidity controls operate directly at the transaction layer rather than through post-trade processes. This transition is unfolding across three interconnected dimensions: the evolution of regulated digital money formats, the infrastructure layers that support institutional settlement and the regulatory and interoperability constraints that determine which models can scale. Asia Pacific as a proving ground for regulated digital money This structural shift reflects rising institutional demand and increasing regulatory clarity globally, particularly in Asia Pacific, where tokenised deposits, regulated stablecoins and wholesale central bank digital currencies are moving from controlled pilots into early production. Banks treat these formats not as experimental novelties but as extensions of balance sheet activity that must function alongside real-time gross settlement systems, domestic instant payments and correspondent banking rails. Regulators and industry leaders are converging on a digital money triangle to support this institutional settlement while preserving supervisory oversight: tokenised deposits, stablecoins and wholesale central bank digital currencies (CBDCs). Tokenised deposits act as ledger-based claims on commercial bank money; stablecoins operate as digital tokens backed by regulated reserves; and wholesale CBDCs function as the ultimate settlement asset between licensed institutions. Liu Tianwei, co-founder and chief executive officer (CEO) of StraitsX, a Singapore-based digital asset payment infrastructure provider, described this structure as a triangle where most central banks expect CBDCs to remain wholesale instruments. “Tokenised deposits act like private ledgers within a bank’s ecosystem,” he said, while “stablecoins function more like e-money: open, efficient and suitable for a wide range of applications.” John O’Neill, group head of digital assets and currencies at HSBC, framed the model from a client coverage perspective. “The future system is supported by tokenised deposits, CBDCs and regulated stablecoins… we follow our clients wherever the demand is,” he said, underscoring that these instruments are complementary rather than competitive. Regulatory positioning in Asia Pacific prioritises wholesale settlement use cases, including liquidity and treasury operations, over retail experimentation, helping explain why banks in the region are moving faster towards production deployment. The Monetary Authority of Singapore (MAS) has stated publicly that it has no plans to issue a retail CBDC, focusing instead on wholesale applications that integrate with existing bank infrastructure. Banks participate in programmes such as Project Ubin and Project Guardian to examine distributed ledger technology for clearing, settlement and asset tokenisation within regulated markets. Asia Pacific’s combination of advanced domestic instant payment systems and active experimentation in new forms of money allows banks to test how new rails interact with established ones under real operating conditions. Liu Tianwei, Co-Founder and Chief Executive Officer, StraitsX John O'Neill, Group Head of Digital Assets and Currencies, HSBC From pilots to production in regulated digital money These policy choices are now translating into tangible production deployments, revealing which forms of digital money are proving viable at institutional scale. Tokenised deposits represent the most advanced sector for commercial banks because they place commercial bank money on ledger infrastructure without altering the legal nature of the deposit. Banks in Hong Kong, including Standard Chartered and HSBC, have launched institutional settlement pilots reflecting this logic, while global institutions move into production. JP Morgan’s Kinexys platform, the bank’s blockchain-based platform for digital payments and asset tokenisation, which enables institutions to move and settle money in real time, has already processed more than $2 trillion in notional value to date. Akshika Gupta, global head of client solutions for Kinexys at JP Morgan, noted that the bank has operated institutional blockchain platforms for “several years now,” adding that Kinexys processes “more than $3 billion in daily transaction volume” across post-trade and on-chain cash. These volumes demonstrate that the platform functions as part of the bank’s core settlement infrastructure rather than as an isolated innovation initiative. While tokenised deposits anchor value on bank balance sheets, institutions increasingly assess regulated stablecoins as a circulation layer for cross-border corridors where correspondent banking introduces delay and foreign exchange exposure. StraitsX illustrates this operational demand through partnerships with platforms including Grab and Alipay+, where transactions settle in XSGD, a Singapore dollar (SGD) stablecoin. Liu points to instant settlement and reduced foreign exchange exposure as the primary benefits. Geoffrey Kendrick, global head of digital assets research at Standard Chartered, links the future scale of these models directly to regulatory clarity. He projects significant growth in stablecoin market capitalisation if regimes such as the European Union’s Markets in Crypto-Assets (MiCA), the United States’ GENIUS Act and frameworks in Hong Kong and Singapore provide consistent treatment. Without that clarity, he warned, “non-bank firms and fintechs may dominate while banks face constraints,” despite banks possessing governance structures suited to systemically important instruments. Regulatory uncertainty, balance-sheet constraints and the need for legal settlement reinforce why banks continue to view central bank money as the ultimate settlement anchor where legal finality and systemic stability are required. Wholesale CBDC programmes therefore progress at varying speeds because central banks are optimising for different domestic priorities. Hong Kong is advancing the Virtual Asset Trading Platform regime and Project Ensemble, while Singapore maintains its role as a regional hub through Project Ubin, BLOOM (an industry pilot exploring multi-currency digital settlement infrastructure) and Project Guardian. Hong Kong’s initiatives focus on building a regulated framework for digital asset trading and testing wholesale CBDC-based interbank settlement and tokenised assets, while Singapore prioritises wholesale CBDC experimentation, cross-border payments and scalable tokenisation use cases through public–private partnerships. Akshika Gupta, Global Head of Client Solutions for Kinexys, JP Morgan Geoffrey Kendrick, Global Head of Digital Assets Research, Standard Chartered The MAS most recently launched the SGD Testnet to support legally final interbank settlement in live environments, underscoring its view of wholesale digital money as a system-level utility rather than a standalone innovation. However, central-bank infrastructure alone does not resolve the coordination challenge banks face when settlement requires multiple counterparties to integrate bilaterally. In response, industry-led shared infrastructure initiatives have emerged to aggregate liquidity and standardise settlement workflows at scale. Within this landscape, MAS’ BLOOM and mBridge (a multi-central bank digital currency platform) continue to serve as exploratory coordination layers, testing how tokenised money and central-bank systems might interoperate across jurisdictions. By contrast, Partior has progressed into production as a bank-backed settlement network supported by DBS, JP Morgan, Deutsche Bank and Standard Chartered, reflecting a preference for commercially governed platforms where operational control, compliance and liquidity management can be aligned from day one. This production shift is now influencing global market infrastructure providers. Javier Pérez-Tasso, CEO of Swift, confirmed plans to introduce a shared ledger layer into Swift’s core infrastructure. Rather than creating a new settlement network, the shared ledger is designed to sit alongside Swift’s existing messaging fabric, allowing tokenised deposits and other on-chain representations of money to be referenced, synchronised and settled while preserving established correspondent relationships and messaging standards. Crucially, Swift’s shared ledger approach embeds risk controls, compliance checks and reconciliation logic directly into the transaction flow, rather than relying on post-settlement processes. This allows banks to treat tokenised deposits as extensions of existing nostro, vostro and treasury operations, with ledger updates and messaging remaining tightly coupled. By maintaining compatibility with ISO 20022 and existing Swift interfaces, the model lowers integration friction for banks that already rely on Swift for cross-border payments, while enabling atomic settlement and programmability where counterparties adopt tokenised money. Manuel Klein, head of market management for payments and digital currencies at Deutsche Bank, described Partior and Swift’s shared ledger as complementary expressions of the same architectural shift: moving commercial bank money onto ledger infrastructure without fragmenting liquidity or governance. In this view, the shared ledger becomes a coordination layer that allows tokenised deposits issued on different platforms to interoperate with treasury systems, liquidity management tools and cross-border settlement processes already embedded in global banking operations. Javier Pérez-Tasso, Chief Executive Officer, Swift Manuel Klein, Head of Market Management for Payments and Digital Currencies, Deutsche Bank The interoperability barrier As production volumes grow, the primary constraint is no longer technology maturity but the ability to move liquidity across institutional and jurisdictional boundaries. Fragmentation persists as banks operate ledger-based systems within institutional boundaries, creating what Kara Kennedy, global co-head of Kinexys at JP Morgan, described as “islands of innovation.” She stressed that “tokenised deposits, CBDCs and stablecoins are very different,” and that “commercial bank money on chain is a necessity to really unlock and scale some of the solutions in the public blockchain ecosystem.” These isolated networks limit the ability to move liquidity across counterparties and jurisdictions even where individual platforms function reliably, forcing banks to work towards a “multi-chain, multi-solution end state.” David Katz, vice president of strategy and policy for Asia Pacific at Circle, one of the largest private stablecoin issuers, reinforced this by noting that tokenised deposits often operate as “walled gardens,” observing that “Bank B may not accept Bank A’s tokenised deposit,” which creates capital and liquidity treatment challenges. This lack of mutual acceptance creates capital, liquidity and risk-weighting challenges that limit broader adoption. Global payment infrastructure offers parallel lessons on how interoperability can scale when regulatory alignment is prioritised. Europe’s Single Euro Payments Area (SEPA) demonstrates how harmonised rulebooks, common messaging standards and regulatory mandates can eliminate the distinction between domestic and cross-border payments within a bloc, reducing costs and settlement times without replacing underlying banking infrastructure. In Southeast Asia, ASEAN’s Regional Payment Connectivity initiative takes a different approach, linking domestic fast payment systems through bilateral and multilateral arrangements to enable real-time, low-cost cross-border transfers while allowing national regulators to retain control over domestic systems. In Africa, the Pan-African Payment and Settlement System (PAPSS) illustrates how shared settlement infrastructure can reduce reliance on correspondent banking by enabling local-currency settlement across multiple jurisdictions under a coordinated central-bank framework. These models reinforce that fragmentation is not primarily a technical problem but an institutional one, shaped by regulatory design, governance frameworks and mutual acceptance of settlement assets. Kara Kennedy, Global Co-Head of Kinexys, JP Morgan David Katz, Vice President of Strategy and Policy, Asia Pacific, Circle Some jurisdictions are attempting to resolve this fragmentation through regulatory design rather than bilateral integration. Japan offers a potential blueprint in the form of DCJPY, a regulated, multi-issuer tokenised deposit platform that allows participating banks to issue interoperable tokens under a shared framework. Mai Kaneko, international business lead at DeCurret DCP, explained that “the first issuing bank is already live, and Japan Post Bank is expected to become the second issuing bank next year.” She emphasised that “there is one DCJPY and it is fully interoperable between banks,” enabled by standardised smart contracts and common issuance and redemption rules. In parallel, banks and central banks are testing synchronisation models that bridge tokenised assets with central-bank systems rather than replacing them outright. Initiatives such as mBridge and BLOOM explore how wholesale CBDCs, tokenised deposits and existing settlement infrastructure might interoperate across jurisdictions. Pérez-Tasso explained that Swift will remain focused on infrastructure while banks and central banks manage money issuance and settlement. This reinforces the view that interoperability depends less on any single platform and more on aligned standards for data exchange, messaging and settlement finality. Mai Kaneko, International Business Lead, DeCurret DCP Kirit Bhatia, Chief Digital Assets Officer, Banking Circle Where shared standards remain elusive, proprietary and multi-bank networks offer a pragmatic alternative by abstracting complexity from end users. Banking Circle, a licensed payments bank and financial infrastructure provider that offers clearing and settlement services to banks and payment institutions, reports that it offers a single application programming interface (API) model that connects various payment rails and tokenised settlement layers. “From our customers’ perspective, it is that single integration,” said Kirit Bhatia, chief digital assets officer. “They can move money seamlessly 24/7 while we manage the wiring underneath.” Ani Sane, co-founder and chief business officer of TerraPay, a cross-border payment infrastructure platform, described a similar strategy focused on extending infrastructure across digital-only corridors. “Interoperability lies at the core of our long-term strategy,” he said, emphasising the need to support existing payment methods alongside future ones. Katja Lehr, head of payments and industry advocacy for Europe, the Middle East and Africa (EMEA) at JP Morgan argued that infrastructure alone cannot resolve these issues without harmonised standards such as ISO 20022, which remains the international standard for electronic data interchange between financial institutions. Banks are therefore transitioning cautiously from isolated networks towards integrated settlement corridors governed by common rules. Ani Sane, Co-founder and Chief Business Officer, TerraPay Katja Lehr, Head of Payments and Industry Advocacy for EMEA, JP Morgan Institutional demand and regulated on- and off-ramps Institutional client demand now dictates investment in digital money infrastructure. Corporates and asset managers expect regulated movement between tokenised formats and traditional accounts. Banks respond by supporting activity originating in decentralised environments while maintaining supervisory governance. Jeff Parker, CEO of Paymentology, a global issuer-processor platform, noted that institutions often “don’t think about” underlying infrastructure even though it determines how quickly new use cases scale, which places responsibility on banks and infrastructure providers to manage complexity invisibly. Permissioned blockchains, which are networks where access is restricted to authorised participants, have become the preferred architecture for meeting this demand because they enforce identity, governance and settlement rules within controlled networks. Banks such as JP Morgan and Standard Chartered deploy these networks for institutional clients, while infrastructure providers including Ripple and Thunes operate as compliance-led distribution layers. Jack McDonald, senior vice president of stablecoins at Ripple, argued that bank-issued stablecoins “can be considered extensions of the banking system governed by strict safeguards like capital requirements and redemption rights.” Jeff Parker, Chief Executive Officer, Paymentology Jack McDonald, Senior Vice President of Stablecoins, Ripple Operational safeguards and risk management in programmable settlement Programmable settlement introduces operational risks that banks must manage directly. Embedding rules into transaction workflows increases reliance on automated verification and real-time liquidity monitoring. Artificial intelligence (AI) accelerates these requirements as machine-led processes begin initiating transactions. Liu described the emergence of “generative payments,” where “machines or digital agents initiate transactions under set parameters.” Paolo Ardoino, CEO of Tether, added that stablecoins are now “recognised as powerful technology,” citing adoption across emerging markets. Governance considerations have therefore prompted banks and payment networks to build compliance layers capable of supporting agent-led activity. Sandeep Malhotra, executive vice president of core payments for Asia Pacific at Mastercard, highlighted the importance of maintaining “trust and confidence” in agent-led commerce, noting that Mastercard is developing standards that verify agent identity and intent. Paolo Ardoino, Chief Executive Officer, Tether Sandeep Malhotra, Executive Vice President of Core Payments, Asia Pacific, Mastercard Operational resilience has thus become a core consideration alongside programmability. Lee Zhu Kuang, managing director and group head of digital assets at UOB, emphasised the need to remove counterparty and reconciliation risk through full traceability and the ability to revert to established rails. He described the bank’s approach of embedding “compliance as a code in everything we do,” which replaces periodic checks with continuous oversight. Danielle Szetho, head of digital asset portfolio and governance at Standard Chartered, highlighted the need for strong identity and governance controls, noting that while private networks offer predictable counterparties, public chains require safeguards because “if you send assets to the wrong wallet address, you may never get them back.” Liquidity remains a decisive factor. O’Neill identified liquidity as “the ultimate test of whether digital assets can succeed,” a view shared by Kendrick of Standard Chartered and Sane of TerraPay. Chan Boon Hiong, head of securities market and technology advocacy for Asia Pacific at Deutsche Bank identified emerging risks including cryptographic key dependency, cybersecurity vulnerabilities and smart-contract governance gaps. These risks reflect reliance on secure key management to prevent asset loss and governance weaknesses in smart contracts where coding errors can lead to regulatory breaches. Mark Monaco, head of global payment solutions at Bank of America reinforced that digital assets represent “a new technology… an opportunity to improve outcomes,” but only if solutions can withstand volume and regulatory scrutiny. These safeguards form the foundation for a hybrid architecture where digital and traditional finance can operate safely together. Lee Zhu Kuang, Managing Director and Group Head of Digital Assets, UOB Danielle Szetho, Head of Digital Assets Portfolio and Governance, Standard Chartered The convergence of digital asset models and traditional finance Banks increasingly operate hybrid models where tokenised infrastructure coexists with traditional rails, a convergence most advanced in markets such as Hong Kong, Singapore and the UAE. Rene Michau, group head of digital assets at Standard Chartered, argued that “public blockchains represent a new ‘operating system for financial services’ that can coexist with, rather than replace, traditional rails.” Lee reinforced this architecture, describing structures where “assets such as money market funds may be issued on public chains, while certification, custody and control operate on private chains.” This reflects a deliberate risk-management choice, allowing banks to capture efficiency gains from programmability while retaining established fallback mechanisms. Rene Michau, Group Head of Digital Assets, Standard Chartered Ronak Daya, Head of Product, Paxos The stablecoin ecosystem illustrates this convergence through collaboration between banks and independent issuers. Ronak Daya, head of product at Paxos, a blockchain infrastructure provider and stablecoin issuer, highlighted efforts to redistribute stablecoin reserve revenue, stating that “if you’re using a stablecoin, you should be paid appropriately for the value you bring in.” At the infrastructure layer, corporate integrations increasingly abstract settlement complexity away from end users. Mai Leduc, head of product at Bridge, a payments infrastructure provider, argued that “the end-user should not need to know they are transacting in stablecoins… it should simply work in the background as an efficient settlement layer.” This approach is now being adopted by merchant-facing platforms such as Stripe, which has begun embedding stablecoin rails with compliance controls, including upfront anti-money laundering checks. These models gain traction where regulatory clarity allows banks to combine public-network liquidity with regulated custody, compliance, and distribution. Mai Leduc, Head of Product, Bridge Digital money has moved from innovation labs onto institutional balance sheets, signalling a shift towards early integration rather than wholesale replacement of legacy systems. Evidence from banks, infrastructure providers and regulators indicates that future financial architecture will evolve into hybrid models where programmable assets operate alongside established rails. Interoperability represents the central constraint for the next phase of adoption. Asia Pacific has emerged as the proving ground for this architecture because regulators have provided clarity for controlled, production-grade experimentation. Over time, programmable money is likely to become a routine tool for institutional liquidity management, with the distinction between digital and traditional finance fading as compliance, liquidity and interoperability are engineered directly into the settlement layer.
