The International Monetary Fund (IMF) has called on policymakers to upgrade payment systems and regulatory frameworks in response to the growing influence of artificial intelligence (AI) in financial transactions. According to the IMF's First Deputy Managing Director, Dan Katz, AI-powered agents have the potential to reduce transaction costs, increase competition among financial service providers, and automate complex payments. This development could create opportunities for economies such as Nigeria to improve efficiency and expand digital financial services.
Katz noted that existing payment systems were not designed to handle autonomous AI agents capable of conducting transactions continuously and at scale. He suggested that AI could enable consumers and businesses to compare transaction fees, exchange rates, and service quality in real-time, potentially putting pressure on financial institutions to improve their offerings. Additionally, AI could automate regulatory compliance, customer due diligence, sanctions screening, and reporting, particularly in cross-border transactions involving different currencies and regulatory requirements.
The IMF's call for modernisation comes as AI technology continues to advance and reshape the financial landscape. Katz highlighted that AI could reduce administrative bottlenecks and improve the speed and consistency of compliance processes in international payments. For Nigeria, where businesses and households increasingly depend on digital platforms for domestic and international transactions, such developments could help reduce payment costs, improve access to financial services, and support trade.
However, Katz emphasised that the benefits of AI in payment systems would depend on investment in digital infrastructure, stronger interoperability, and regulatory frameworks capable of accommodating emerging technologies. He also noted that tokenisation could support the next generation of payment systems by enabling programmable transactions and faster settlement. Nevertheless, this transition would require clear legal frameworks defining ownership rights, asset protection, and the relationship between digital tokens and their underlying assets.
Policymakers must also address liquidity requirements and ensure that new payment technologies do not undermine financial stability. Katz suggested that central banks could explore new forms of digital money, including tokenised reserves, while governments could consider issuing public debt instruments in tokenised forms. Furthermore, he urged regulators to account for individual countries' economic circumstances and allow different technologies to compete.
The growing use of AI in financial transactions also raises concerns about cybersecurity risks. Katz warned that as financial institutions become more dependent on shared digital infrastructure and third-party technology providers, they may face increased cybersecurity threats. He called for stronger governance, technical safeguards, effective incident-response systems, and greater coordination among regulators, governments, and private-sector operators.
On AI regulation, Katz urged policymakers to focus on identifiable market failures and systemic risks, warning that excessive or poorly designed regulation could restrict competition, discourage innovation, and concentrate market power. He emphasised that regulatory interventions should be proportionate, targeted, and internationally coordinated to balance innovation with financial stability. For Nigeria, such developments could provide an opportunity for the Central Bank of Nigeria (CBN) to assess how emerging payment infrastructure could complement existing digital payment channels without weakening regulatory oversight.
Key points
- The IMF has urged policymakers to modernise payment systems and strengthen regulatory frameworks as AI reshapes financial transactions.
- AI-powered agents could reduce transaction costs, increase competition among financial service providers, and automate complex payments.
- The transition to new payment systems would require clear legal frameworks defining ownership rights, asset protection, and the relationship between digital tokens and their underlying assets.
