Authors: Morten L. Bech, Christine Preisig, and Kimmo Soramäki

• Globalization and technological innovation—two of the most pervasive forces influencing the financial system and its infrastructure—are having a profound effect on the internationalization and automation of payments.
  
  
• The importance of payments and settlement systems to the smooth operation and resiliency of the financial system makes it necessary for stakeholders to understand the evolving landscape in which the systems operate.
  
  
• Authors Bech, Preisig, and Soramäki examine the current environment for large-value payments systems (LVPSs); they describe ten major long-range trends worldwide and identify three key drivers of the trends: technological innovation, structural changes in banking, and the evolution of central bank policies.
  
  
• Technological innovation is making LVPSs safer and more efficient while allowing for new systems that are not limited to one country or currency.
  
  
• Structural changes in banking—such as immense growth in the financial sector, new roles for firms and their products, and greater globalization of financial institutions and their services—are affecting the use of LVPSs. These changes are resulting in increasing settlement values and volumes, shrinking average payment sizes, and a falling number
  of LVPS participants.
  
  
• Evolving central bank policies are enabling the banks to become more active in monitoring existing and planned systems, assessing systems according to international standards, and inducing change. Central banks’ wider involvement in payments systems has led to the adoption of common standards to improve risk management as well as enhance service levels, resulting in, for example, longer operating hours and lower transaction costs.
  
  
• The authors also note the relevance of each of these trends to the future of the LVPS landscape and potential new developments.
  
  

Morten L. Bech is a senior economist at the Federal Reserve Bank of New York; Christine Preisig is a former senior policy expert at the Bank; Kimmo Soramäki is a Ph.D. candidate at Helsinki University of Technology on leave from the European Central Bank.

The views expressed in this summary are those of the authors and do not necessarily reflect the position of the European Central Bank, the Federal Reserve Bank of New York, or the Federal Reserve System.