Modernising Wholesale Payments: Why the Main Barriers Are Legal, Not Technological

Cross-border payments remain one of the weakest points in the global financial system. They are often slow, costly, opaque and legally complex. This is especially true for wholesale payments, where banks, financial market infrastructures and other major institutions settle large-value transactions across borders. Yet the legal infrastructure supporting them has not kept pace with technological change.

My forthcoming article in the Banking & Finance Law Review, ‘Modernising Wholesale Payments: Addressing Legal Barriers to Central Bank Innovation’, was prepared as part of my 2025 ECB Legal Research Scholarship and informed by discussions with members of the ECB legal team. It responds to the G20 Roadmap for enhancing cross-border payments, which targets 75% of cross-border wholesale payments being credited within one hour by the end of 2027.

Policymakers are exploring innovations such as the tokenisation of central bank reserves, distributed ledger technology, atomic settlement, programmable payments and interoperable ledgers. But technical completion is not the same as legal finality: a transaction recorded on a ledger may still be vulnerable to challenge unless the law recognises it as final and irrevocable.

The article examines three pathways to achieving the G20 goals: extending the operating hours of Real-Time Gross Settlement (RTGS) systems, interlinking RTGS systems across jurisdictions, and developing wholesale central bank digital currencies (wCBDCs). It does not argue that wCBDC is inherently superior to RTGS modernisation, CLS, shared platforms or conventional database-based infrastructures. Rather, the central argument is straightforward: whichever pathway is adopted, the barriers to safer and more efficient cross-border wholesale payments are not merely technological, but legal.

The most important legal impediment is settlement finality risk, which cannot be resolved through technology alone. This is the risk that a transfer treated by the system as final may later be challenged, unwound or reversed by an insolvency administrator, court or other legal authority. In a cross-border context, a transfer may be final on the ledger but still vulnerable under the corporate insolvency legislation of another jurisdiction. If that jurisdiction applies rules such as the zero-hour rule and lacks effective settlement finality legislation, payments completed earlier in the day may be treated as void once insolvency proceedings begin.

Many jurisdictions have therefore enacted settlement finality legislation to protect payments processed through designated systems from ordinary insolvency rules. These statutes ensure that once a payment has been processed, it cannot later be unwound merely because the sender has become insolvent. This protection is essential to trust in the payment system and is a central legal precondition for interconnecting RTGS systems, shared platforms or interoperable wCBDC ledgers.

The article therefore argues that wholesale payment modernisation must be led by public authorities and supported by a robust legal architecture. Private-sector initiatives, including stablecoins and tokenised deposits, may have a complementary role in some markets. But they cannot replace settlement in central bank money for systemically important wholesale payments. Central bank money remains the safest settlement asset because it eliminates credit risk and supports final settlement, provided the right legal protections are in place.

Domestically, the first task is legal clarity. Central banks should confirm whether they have authority to issue and operate wCBDC. In some jurisdictions, wCBDC may be characterised as a technological evolution of reserve balances rather than a new monetary instrument and may be issued under existing central bank legislation.

Cross-border arrangements require more than domestic reform. Whether based on interconnected RTGS systems, shared platforms or interoperable wCBDC ledgers, they would need a common legal and operational framework to ensure that transfers are recognised as final, enforceable and protected against insolvency clawback across participating jurisdictions.

I therefore argue for a Single Rulebook for cross-border arrangements. This would not replace domestic law, but would establish common standards for settlement finality, access, liability, AML/CFT compliance, sanctions screening, data protection, collateral, dispute resolution, operational resilience and loss allocation. Each participating central bank should confirm that its domestic law gives effect to the common rules.

The article focuses on the Eurosystem because it is actively exploring wholesale settlement in central bank money through initiatives such as Pontes and Appia. This gives Europe an opportunity to shape the next generation of cross-border wholesale payment infrastructure. A euro-denominated wCBDC could support the international role of the euro, deepen European capital market integration and reduce dependence on private or non-Eurosystem payment infrastructures.

The future of wholesale payments will not be determined only by technological innovation. It will also be determined by law. Unless legal systems provide certainty that cross-border transfers are final, enforceable and protected against insolvency challenge, even the most advanced payment technology will remain incomplete. Without these legal protections, the G20’s ambitious cross-border wholesale payment goals are unlikely to be achieved by the 2027 deadline.

The full paper can be accessed here.

Christian Chamorro-Courtland is a Senior Lecturer at Western Sydney University’s School of Law.