What is programmable money?

Programmable money is digital currency that contains built-in logic determining when, how, and to whom funds can be transferred. Instead of separating payment execution from business rules, programmable money embeds conditions directly into the value itself using smart contracts and blockchain technology, enabling payments to execute automatically when predetermined criteria are met.

The Bank for International Settlements (BIS) launched Project Agora in 2024 with seven central banks to explore how programmable money could transform cross-border payments. The project brings together over 40 financial institutions to test how tokenized commercial bank deposits can integrate with tokenized central bank reserves on programmable platforms, aiming to enable what BIS calls "conditional or always-on payments" that maintain banking system safety and reliability.

Unlike traditional digital payments that require multiple systems for approvals, routing, and reconciliation, programmable money collapses these layers into a single atomic transaction where the payment and its governing logic execute together.

How does programmable money work?

Programmable money operates through three core components that work together on blockchain infrastructure:

• Smart contracts are self-executing programs that define payment conditions. When all specified conditions are met, the contract automatically releases funds without manual intervention. For instance, a smart contract might verify delivery confirmation before releasing payment to a supplier
• Tokenization converts traditional currency into digital tokens that can carry embedded rules. These tokens represent value in a way that is programmable and interoperable across different platforms. Stablecoins like USDC and USDT function as programmable money when used with smart contracts
• Oracles bring external data onto the blockchain so smart contracts can respond to real-world events. If a payment depends on a flight arrival, temperature reading, or stock price, an oracle feeds that information to the smart contract to trigger execution

This architecture creates what's called "coherence guarantees," where the payment state always matches the logic state governing it. There's no reconciliation needed afterward because the transaction only completes if all conditions align.

What is the difference between programmable money and programmable payments?

These terms are often used interchangeably, but there's a technical distinction.

Programmable money refers to embedding rules directly into the currency itself. The money can only be spent in predefined ways, such as restrictions on which merchants can accept it, geographic limitations, or time-based expiration. The digital euro research by the European Central Bank explores these embedded constraints.

Programmable payments automate the conditions, timing, and execution of transactions using smart contracts without restricting how the money functions otherwise. The payment process itself is programmable, but the currency remains general-purpose.

In practice, most discussions about "programmable money" refer to programmable payments, where stablecoins or tokenized deposits move through smart contracts that enforce business logic. Basic programmable payments like standing orders and direct debits already exist in traditional banking, but blockchain-based systems enable far more complex conditional logic.

What are the use cases for programmable money?

Programmable money enables several transaction types that are difficult or impossible with traditional payment rails:

• Conditional payments release funds only when specific criteria are verified. A company hiring a freelancer can use a smart contract that automatically pays upon work completion and approval. Supply chain payments trigger when goods reach their destination and pass inspection. Trade finance payments execute when shipment documentation meets all requirements
• Escrow automation holds funds until multiple conditions align. Real estate transactions can use smart contracts that release payment only after title transfer, inspection approval, and mortgage funding all complete simultaneously. This eliminates the trust required in traditional escrow arrangements
• Milestone-based disbursements break large payments into smaller releases tied to project progress. Construction contracts, software development agreements, and research grants can automate payment schedules based on verifiable deliverables without manual approvals at each stage
• Treasury management becomes more dynamic when payments can respond to real-time data. Companies can program automatic currency hedging when exchange rates hit specific thresholds, or automatic investment of excess cash balances above defined limits
• Machine-to-machine payments enable devices to transact autonomously. A Federal Reserve analysis describes future scenarios where cars automatically pay for tolls and parking, or smart refrigerators order and pay for groceries when supplies run low

Which institutions are developing programmable money?

Central banks are leading the exploration of programmable money through central bank digital currency (CBDC) projects and tokenization experiments.

The BIS's Project Agora involves the Bank of France, Bank of Japan, Bank of Korea, Bank of Mexico, Swiss National Bank, Bank of England, and Federal Reserve Bank of New York. The project aims to demonstrate how tokenization and programmability can improve cross-border payment efficiency while maintaining regulatory compliance and two-tier banking structure.

In June 2025, the BIS released its Annual Economic Report outlining a "trilogy" of tokenized central bank reserves, commercial bank deposits, and government bonds as the foundation for a next-generation monetary system. The report argues that programmability can transform cross-border payments and securities markets while maintaining the core principles of sound money.

Major banks are implementing programmable payment systems. JPMorgan launched JPM Coin for instant institutional transfers. Several banks are testing Partior's blockchain platform for automated cross-border settlements with built-in compliance checks. UniCredit issued tokenized structured notes with automated coupon payments through smart contracts in late 2025.

The European Central Bank ran a consultation in 2022 exploring programmable payment services for the digital euro, examining which use cases would be most valuable and what technical standards would enable interoperability.

What are the limitations of programmable money?

Several technical and regulatory barriers slow the adoption of programmable money at scale:

• Technical complexity creates higher upfront costs. Building and auditing smart contracts requires specialized blockchain expertise that most financial institutions lack. Smart contract bugs can be permanent and expensive since blockchain transactions are immutable
• Regulatory uncertainty complicates cross-border implementations. Different jurisdictions have conflicting rules on settlement finality, anti-money laundering requirements, and which entities can issue programmable digital currency. The regulatory framework for tokenized money is still evolving
• Interoperability gaps prevent seamless integration across systems. Different blockchain platforms use incompatible smart contract languages and token standards. Most programmable payment projects operate in silos without connections to other platforms or traditional payment rails
• Network fees can become prohibitively expensive during periods of high blockchain activity. Transaction costs on Ethereum and other networks fluctuate based on demand, making cost prediction difficult for business use cases
• Limited adoption means programmable money lacks the network effects that make traditional payment systems valuable. Most businesses still rely on conventional banking infrastructure, creating a coordination problem where early adopters face higher costs without widespread benefit

Programmable money and cross-border payments

Programmable money addresses several structural problems in international payments by enabling atomic settlement and embedded compliance.

Traditional cross-border payments route through multiple correspondent banks, each performing separate KYC checks, sanctions screening, and reconciliation. This creates delays of several days and ties up liquidity in nostro accounts. Programmable money can execute all verification steps simultaneously within the smart contract, settling instantly once all conditions clear.

BIS research on Project Agora specifically targets these inefficiencies. By tokenizing both central bank money and commercial deposits, the system aims to enable "always-on" cross-border transactions that settle 24/7 without correspondent banking delays.

Stablecoin infrastructure already demonstrates programmability in practice. Due's payment API enables stablecoin transfers with automated compliance workflows, instant settlement, and transparent FX across 80+ countries. Smart contract integration allows businesses to build conditional payment logic on top of stablecoin rails without the delays and costs of traditional correspondent banking.

The global smart contracts market is projected to grow from $315 million in 2022 to $1.46 billion by 2029, driven largely by demand for programmable payment capabilities in international transactions and machine-to-machine commerce.