Jackson Hole Policy Symposium is usually remembered for a sentence about interest rates. In 2026, its more consequential message may have concerned the architecture beneath money. While financial innovation will make finance more fluid, i It will not necessarily make it more equal.
Read together, the symposium papers point to a counterintuitive conclusion. Technology can lower the cost of moving money while increasing the value of the deepest market, the safest asset and the strongest backstop. Innovation of this kind does less to erase monetary hierarchy; instead, it reinforces it.
This matters most outside advanced economies. Much of the operational analysis is framed by systems with deep bond markets, elastic liquidity, effective supervision and currencies that residents willingly hold. In many emerging market and developing economies, they remain the policy agenda.
This adds a new dimension to what I have called the ‘sovereignty premium’: the economic cost countries willingly pay to secure financial autonomy in a system whose strongest currencies, markets and backstops are unevenly distributed. By lowering the cost of moving into foreign money and safe assets, innovation can raise the cost of preserving domestic monetary space. It also reinforces a related argument: what matters is not the rail on which a claim travels, but the balance sheet against which payment becomes final. The faster claims move, the more sharply markets price what stands behind them.
Less friction can deepen hierarchy
The dollar’s share of allocated reserves has fallen to 57% in early 2026 from 72% in 2000. Yet it still accounts for 59% of Swift-tracked international payments and 82% of trade finance. While the surface is diversifying, the monetary hierarchy underneath remains remarkably durable.
Dollar-backed stablecoins make safe dollar claims easier to acquire; their issuers hold dollar assets as backing. In the model developed by economists Gordon Liao, Eswar Prasad and Tony Zhang, this deepens demand in the dollar bond market, raises the dollar issuance premium, the value attached to a bond’s settlement liquidity and induces more emerging-market firms to issue debt in dollars. Local-currency corporate issuance falls.
The result is not preordained. Other currencies can compete if their issuers combine better technology with deep safe-asset markets, credible regulation and reliable liquidity backstops. But technology alone is not a route to de-dollarisation. It may digitalise the dollar’s incumbency advantage.
There is also a surveillance issue. The paper’s proxy shows private EMDE holdings of US securities rising to $1.5tn in 2025 from about $0.5tn in 2020, while official holdings levelled off. This does not establish substitution for official self-insurance. But reserve adequacy may describe the public buffer without fully capturing private foreign-asset accumulation.
The anchor matters more than the rail
Economist Darrell Duffie’s central point is simple. The missing element in large-scale tokenised finance is not the token; it is safe cash settlement.
Stablecoins and tokenised commercial bank deposits may have legitimate uses. But core markets need a settlement asset that remains unquestioned under stress and a liquidity provider able to expand its balance sheet when markets seize up. Duffie therefore favours arrangements grounded in central bank money: tokenised reserves, synchronisation with conventional real-time gross settlement or omnibus-account narrow banks. Isabel Schnabel, economist and member of the executive board of the European Central Bank, reaches a similar conclusion. Private issuers can create claims, however, they cannot create the elastic public liquidity that core markets need in stress.
Fragmentation is the danger. In Duffie’s illustrative model, moving only 10% of activity to a separate, non-interoperable rail raises demand for settlement balances and funding costs by roughly 30%. These are model results, not forecasts. But the mechanism matters especially where collateral is scarce, interbank markets are thin and liquidity is concentrated.
A tokenised illiquid bond is still an illiquid bond. The code cannot create a benchmark yield curve, a repurchase agreement market, market-makers or a capable debt office. Nor can a new rail create a lender of last resort. Global rails still rest on national backstops – and those backstops are profoundly unequal.
Payments migration can become credit migration
Bank accounts do more than transmit money. They generate cash-flow information that banks use to assess borrowers. When payments migrate to token-based platforms, funding and information may migrate with them.
In bank-dominated systems, relationship banking and account histories often compensate for incomplete credit registries, weak reporting and limited market finance. Deposit migration can therefore weaken not only bank funding, but also the screening channel for household and small-business credit.
Token platforms also create data. The question is who controls that data, whether lenders can use them responsibly and whether supervisors can see the resulting credit chain. Itay Goldstein’s discussion at Jackson Hole this year suggests that tokenised deposits can preserve more of the regulated account relationship than free-standing stablecoins – and that policy should protect intermediation, not incumbent bank rents.
Build the plumbing before commissioning the token
For many EMDE authorities, the first-order task is institutional, not technological: extend real-time gross settlement operating hours; widen fast-payment coverage; preserve netting; permit properly supervised non-banks to access payment systems; improve identification and compliance; and interlink domestic systems. Tokenisation may add programmability and improve collateral mobility, but should solve a demonstrated problem, not become a procurement-led substitute for institutional development.
Three gaps remain: the capacity to govern 24-hour programmable finance; the inequality of national liquidity backstops and access to the global financial safety net; and sequencing, when payments systems, local-currency debt markets, supervision and crisis facilities must all be built together.
Economist Markus Brunnermeier adds a fourth. Where the financial sector depends on foreign technology that domestic authorities cannot back up, the state loses technological sovereignty and cannot enforce its own rules. He also expects advanced-economy monetary policy to drift towards practice long familiar in EMDEs: direct instruments, coarser transmission, larger balance-sheet buffers. Convergence of that kind is not progress.
The symposium was not an argument against innovation. Nor should emerging economies stand aside while standards are written elsewhere. Their first question should not be: which token should we issue? It should be: who bears the balance-sheet, liquidity, information and settlement risks? Do claims remain convertible at par? And who backstops the backer when confidence turns?
The new financial order may be more fluid, but it will place heavier demands on its foundations. Innovation will not make sovereignty obsolete. It will raise the value of credible sovereignty, and the cost of trying to preserve it without credible institutions.
Udaibir Das is Vice Chair of OMFIF, Member of the Bretton Woods Committee, Distinguished Fellow at the Observer Research Foundation-America, Visiting Professor at the National Council of Applied Economic Research, and Senior Adviser of the International Forum for Sovereign Wealth Funds.
Image credits:Â Federal reserve
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