As technological advances in payment systems are seldom used at their maximum capacity, the increase in their efficiency is a gradual, rather than spasmodic process. In order to better estimate the impact of technology-driven change on the velocity of money in circulation and thereby on monetary policy, central banks thus need to use data from a variety of sources In sum, payment systems are an essential precondition for the implementation of operational monetary policy and their degree of sophistication has a direct impact on the velocity of money circulation, thereby influencing monetary policy itself Turning to financial stability, there is a strong link between efficient payment systems and financial stability. Financial stability implies that the financial system is robust to systemic risk, i.e. the risk that problems in one financial institution lead to problems in other previously sound institutions. Financial stability allows the financial system to withstand shocks without giving way to cumulative processes which impair, first, the processing of payments in the economy, and second, the allocation of savings to investment opportunities. A robust and resilient market infrastructure is essential for financial stability The provision of credit to commercial banks led the central bank to establish a function to control the creditworthiness of the borrowers. This function eventually developed into “banking supervision”. A commercial bank can be the source of financial instability if it faces technical difficulties or if it fails to repay funding. This funding can come either from the regular operations of the central bank or from other depositors.
These arguments that were compelling at the dawn of central banking are most likely to ensure that modern payment systems continue to have a determined impact upon monetary policy and a positive influence upon the stability of the financial system as whole. Thank you for your attention. BIS central bankers’ speeches  3