Yaiza Cabedo
Financial Sector Expert - International Monetary Fund

Yaiza Cabedo is a financial sector expert at the International Monetary Fund, specialising in financial market infrastructures, digital finance, and capital-market development. At the Monetary and Capital Markets Department, she works across FSAP assessments, technical assistance missions, and policy initiatives on payments, securities settlement, clearing, and the impact of tokenization on market infrastructure. Her recent work includes analytical projects examining how clearing and settlement are evolving in tokenized environments. Before joining the IMF, she worked at the European Securities and Markets Authority, where she focused on derivatives, securities markets, post-trade infrastructure, and financial innovation.

Programmable Finance: Fragmentation or Integration?

A profound transformation is taking place in global finance. Technology is changing how markets connect, how money moves, and how trust is built. The traditional lifecycle of transactions—issuance, trading, clearing, settlement, and reporting—was split, with clear roles and regulatory boundaries separating financial institutions, market infrastructures, and other intermediaries. Today, those boundaries are blurring. Thanks to rapid technological advances and an unprecedented wave of financial innovation, markets are moving toward a more interconnected financial architecture, where payments, securities, and data infrastructures increasingly converge. Across public authorities, private institutions, and innovators, there is a shared ambition: make financial systems more efficient, transparent, and accessible.

At the center of this transformation is the rise of new financial platforms—shared infrastructures that leverage blockchain and bring together the functions of issuance, trading, settlement, custody, and reporting in new and more integrated ways. This redefines how participants interact, how assets and money are recorded and transferred, and how risks are managed. We are moving from siloed systems into more integrated ecosystems with new governance models.

Change is visible across every layer of the financial stack. Messaging and communication are becoming faster and more interoperable, as initiatives such as Swift’s shared digital ledger aim to link over 200 jurisdictions under a 24/7 cycle. Collateral management is being optimized through solutions that allow securities to be mobilized across custodians, reducing onboarding costs and unlocking broader collateral pools. As more assets coexist within shared environments, collateral efficiency rises, supporting liquidity. Securities settlement and payment systems increasingly experiment with tokenized money and programmable logic. Together, these developments demonstrate how technology is transforming essential functions, with the promise of enabling a more seamless flow of assets, information, and liquidity.

This wave of innovation raises new questions about governance and compliance. Innovation must progress hand in hand with accountability and legal certainty. Shared frameworks for coordination, clear responsibilities across jurisdictions, and mechanisms that embed regulatory and supervisory requirements directly into tokens will be essential. Smart contracts can open new opportunities, allowing for participant whitelisting, automated compliance, and simplified reporting. While some market functions will inevitably change, financial institutions recognize that trust remains a critical factor for investors, and that most customers still prefer to interact through intermediaries rather than directly with peers. From both a compliance and user-preference perspective, the presence of legal entities remains essential. In this evolving landscape, Financial Market Infrastructures continue to play a central role. Their long-standing experience in centralizing trust, managing risks, and ensuring orderly clearing and settlement is expanding into programmable, data-rich environments that can catalyze the transition towards even more integrated ecosystems.

In this new architecture, governance is the decisive factor. As financial processes become more automated and interconnected, design choices about validation, access, and data sharing are not merely technical—they are policy decisions that shape access, competition, transparency, and stability. A debate emerges over whether innovation will rely on permissioned or permissionless systems, and how compliance with legal requirements can be ensured under each model. Many traditional institutions, long accustomed to operating closed proprietary systems, now recognize the potential advantages of permissionless or hybrid models. Permissionless networks can lower costs and foster interoperability, while private enclaves or “layer 2” environments can enhance scalability and privacy. Many banks are already investing in hybrid architecture, taking advantage of public networks to lower set-up costs, while building private enclaves to manage privacy.

Another essential question concerns the role of the public sector. Central banks have historically operated the ledgers where central bank money is issued. Looking ahead, these roles could evolve, separating the issuer of money from the operator of the infrastructure where it is issued, allowing issuance on non-proprietary ledgers. At the same time, initiatives such as Project Guardian and Project GL1, led by the Monetary Authority of Singapore, show how the public sector can act as a catalyst for innovation, collaborating directly with banks and technology firms to explore blockchain-based solutions, as well as other initiatives, such as the EU DLT Pilot Regime.

This transformation is also reshaping the skills and capabilities needed across the financial system. The shift toward programmable finance demands new expertise in digital asset custody, smart-contract auditing, and data governance. Supervisors and regulators are also adapting, developing technology-driven oversight tools and data analytics for more real-time supervision. As functions that once belonged to separate entities converge within shared platforms, closer cooperation between central banks and market regulators becomes key. Across the world, international working groups are discussing how to develop frameworks for interoperability, resilience, and market integrity. Authorities are thus getting ready for new challenges.

Yet progress also brings risks. Without common standards, fragmentation could deepen, creating parallel pools of liquidity and new forms of market segmentation. The absence of a safe settlement asset, backed by trust and robust liquidity, and the lack of a common digital identity framework could undermine integration. This is why it is crucial to ensure that innovation, identity, and trust advance together, turning technological progress into greater integration.

The transformation of financial markets is already underway, as new technologies and tokenized assets begin to reshape how markets operate. What once seemed a world of predictable payment and market infrastructures is now a fast-moving, creative, and promising space – one of the most dynamic and innovative frontiers in finance. As this evolution accelerates, our duty is to be prepared, and our collective responsibility is to make this opportunity a lasting success for global finance.

“The views expressed herein are those of the author and should not be attributed to the IMF, its Executive Board, or its management.”