International payments remain one of the least efficient parts of the global financial system. While domestic payments are now nearly instantaneous in many developed countries, cross-border transactions still rely heavily on the centuries-old correspondent banking model, in which funds flow through chains of intermediary banks. Each step brings delays, costs and operational friction. This means international payments remain slow and unnecessarily expensive. For companies, this means slower processing and higher costs in international trade. For remittance senders, these inefficiencies mean a tax on the money they send home.
My latest essay represents the emergence and development of alternatives that enable faster and cheaper cross-border payments. When looking for new digital cross-border payment infrastructures, two options initially emerged: central bank digital currencies (CBDCs) and stablecoins. The competition between them resembles Aesop’s fable of the tortoise and the hare, although, as it turns out, there is now a third animal in the running: the rhinoceros of symbolized bank deposits.
The other context in which this competition matters comes from the increasing tokenization of real-world assets. Ownership of assets such as goods, commercial documents and financial instruments is increasingly represented by digital tokens on distributed ledgers. These tokens allow assets to be transferred instantly and recorded on shared systems, reducing reconciliation and administration costs. Once such assets are transferred to digital ledgers, there will be greater efficiency if the payment systems that support them do the same. If an asset is transferred immediately on-chain but payment is still made through traditional banking rails, some of the efficiency gains may be lost. Digital asset markets work best with digital money that can operate on the same distributed ledgers.
Until recently, many policymakers, including myself, expected CBDCs to take on this role. Like Aesop’s turtle, CBDCs are cautious, slow, and focused primarily on stability. Since CBDCs are issued by central banks, they carry no credit risk and ensure finality of settlement. This is particularly attractive for cross-border payments. If multiple central banks issued interoperable digital currencies, international payments could be made through instant currency exchanges on common platforms. By 2024, numerous central banks were experimenting with such systems, and many experts believed that CBDCs would ultimately support the digital transformation of global payments.
However, developments in 2025 have changed history dramatically. In the United States, policy shifted decisively toward supporting privately issued stablecoins. New legislation has created a federal regulatory framework for payments stablecoins that recognizes licensed issuers and requires them to maintain fully collateralized reserves and ongoing transparency. At the same time, the US Congress passed a bill that would impose a four-year ban on the development of a CBDC.
These developments gave stablecoins a strong boost. Like Aesop’s Rabbit, stablecoin growth became fast, agile, and driven by market and profit incentives rather than public institutions. Major US banks and financial institutions have begun adopting stablecoins for corporate payments, including instant cross-border transfers and programmable settlement mechanisms.
If the race were only between the tortoise of CBDCs and the hare of stablecoins, the hare could very well win. However, there is a third contender in this story: tokenized bank deposits. These are digital representations of traditional bank deposits issued by regulated banks. In practice, these transform ordinary bank money into programmable tokens that can move across digital networks, combining many of the technological advantages of stablecoins with the institutional foundations of the existing banking system.
Because tokenized deposits are bank liabilities, they are subject to established prudential regulations, often benefit from deposit insurance and central bank liquidity in times of stress, and can attract interest. None of these features are typically associated with stablecoins. These protections, developed over centuries, provide a level of stability and security that newer stablecoin frameworks struggle to match. Tokenized deposits also provide users with a smoother transition. Because tokenized deposits involve funds already held in bank accounts, customers can take them with minimal disruption to existing financial relationships.
In Aesop’s original story, the slow and steady tortoise ultimately defeats the confident hare. However, in the emerging race for digital money, the outcome is likely to be different. CBDCs could continue to evolve cautiously, stablecoins could move forward with early market launch, but tokenized deposits, the silent third competitor, will likely ultimately prove to be the longest-lasting model. By combining digital efficiency with the regulatory strength of the banking system, tokenized deposits are ideally suited to support the next generation of global payments.
Ross P. Buckley is a Scientia Professor at the University of New South Wales (UNSW Sydney) and an Australian Research Council (ARC) Laureate Fellow. The full paper can be accessed Here.
https://sites.duke.edu/thefinregblog/2026/07/09/the-future-of-digital-money-the-race-between-the-tortoise-the-hare-and-the-rhino/
