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okt. 06, 2025

As money goes fully digital, central banks must ensure their currencies stay stable and user-friendly or risk ceding ground to private digital assets, says Stefan Ingves, Senior Fellow at SHoF and former governor of Sweden’s central bank.

Former Swedish central bank governor and Swedish House of Finance Senior Fellow Stefan Ingves says the age of paper money is over and warns that central banks must move faster to keep their currencies relevant in a digital world.

Speaking to Bretton Woods Committee’s on the sidelines of the in Basel, Ingves said the future of money will be entirely digital and that central banks risk losing control if national currencies remain slow or costly to use.

“We are moving into an environment where nothing will be on paper. Everything will be digital in one form or the other,” Ingves told Emily Slater, Executive Director of the Bretton Woods Committee. “It has to be easy and cheap to use your own money and if it is not, then you will start using somebody else's money.”

Governance, Not  Technology is the Barrier

Ingves, who also chaired the Basel Committee on Banking Supervision after the global financial crisis, said efforts to improve cross-border payments have been stuck for decades not because of technology, but because of governance.

“Given that I can talk from Basel to somebody in New Zealand in real time, many individuals find it strange that I can do that, but the money doesn’t move, or it moves slowly, or it costs a lot of money,” he said. “That creates tension.”

He suggested a “building block” approach where regional payment systems are linked step by step, and predicted countries will eventually be able to buy “off-the-shelf” payment systems, making adoption faster for smaller economies.

Digital Assets Need Clearer Frameworks

On stablecoins and central bank digital currencies (CBDCs), Ingves said regulation was preferable to none, but frameworks remained fragmented.

“You don’t want, technically speaking, to have the money disappear or somebody else kind of messing you up within those systems,” he said. “The other part, which is definitely not going to go away, is KYC, know your customer, money laundering, tax evasion, and all the rest of it. It would be very unfortunate [...] if we were to end up in a situation where you have kind of formal systems and central bankers deal with formal systems and then you have a bunch of completely informal systems where there aren’t any rules at all.”

Caution Against Weakening Bank Rules

Turning to bank regulation, Ingves cautioned against efforts to simplify rules if they result in lower capital buffers.

“Yes, you can simplify. You can probably simplify in many ways but that means that the leverage ratio has to go up,” he said.

He also downplayed the threat of private credit replacing traditional banks.

“The banking sector always recreates itself sooner or later because we need banks,” Ingves said. “They’re not going to disappear.”

Defending Central Bank Independence

Ingves defended central bank independence as critical to fighting inflation: “You need someone willing to take away the punch bowl when the party gets going.”

Despite growing geopolitical fractures, he said cross-border financial cooperation would remain essential.

“It’s getting easier and easier to move money around and that means you have to keep talking. You don’t have to agree on everything but still you need to keep on talking,” Ingves said.