Why Financial Infrastructure Is Becoming Programmable

Financial infrastructure has always been rule based. Payment systems follow settlement rules. Securities markets operate through clearing and custody arrangements. Compliance is enforced through predefined checks and reporting obligations. What is changing is not the existence of rules, but the way they are implemented.

Increasingly, financial systems are being designed so that rules are executed automatically at the infrastructure level rather than applied after the fact. This shift toward programmability is reshaping how money moves, how assets are managed, and how compliance is enforced.

The drivers are structural rather than technological fashion. Financial systems are handling greater volumes, operating across more jurisdictions, and interacting with a wider range of participants than ever before. Manual controls and fragmented processes struggle to keep pace. Programmable infrastructure offers a way to embed conditions, permissions, and constraints directly into transactions.

Central bank digital currency pilots illustrate this logic. Central banks are not experimenting with programmability to replace existing controls, but to strengthen them. Conditions around usage, settlement timing, and counterparty eligibility can be enforced automatically, reducing operational risk while preserving policy intent. In wholesale contexts, programmability can support delivery versus payment and reduce settlement failures without introducing new intermediaries.

Tokenisation of assets follows a similar trajectory. Representing securities, deposits, or commodities in digital form allows ownership, transfer rules, and corporate actions to be executed through shared infrastructure rather than reconciled across separate systems. The appeal lies less in speed and more in certainty. When rules are embedded, disputes and delays become exceptions rather than norms.

Payments infrastructure is also evolving in this direction. Systems such as instant payment rails already enforce participation rules and transaction limits in real time. The next step is the integration of richer conditions, such as purpose based payments or automated compliance checks. These features are not designed to constrain users, but to reduce friction where trust is already established.

However, programmability introduces new dependencies. Automated execution requires reliable inputs. If identity, ownership, or compliance data is incomplete or inconsistent, programmable systems can amplify errors rather than eliminate them. This places trust registries at the centre of the architecture.

Registries provide the reference data that programmable systems depend on. They establish who is authorised to transact, what assets exist, and under which conditions transfers are valid. Without authoritative registries, programmability risks becoming brittle and opaque. With them, it becomes a tool for resilience and scale.

This is where governance becomes decisive. Programmable infrastructure does not remove the need for oversight. It changes its form. Policymakers must decide which rules can be automated, how exceptions are handled, and how accountability is maintained when execution is delegated to code. These decisions are institutional rather than technical.

India’s digital public infrastructure offers a practical reference. Aadhaar, UPI, and DigiLocker demonstrate how shared systems can encode rules while remaining adaptable. They did not begin as programmable platforms, but they created the conditions for programmability by standardising identity, transactions, and documents. Visual interfaces came later. Trust came first.

The global direction is similar. Financial infrastructure is becoming programmable not because it is novel, but because complexity demands it. The question is not whether systems will embed rules, but whether those rules will rest on shared, verifiable foundations.

SUTRA’s work addresses this underlying requirement. By focusing on trust registries and interoperable architecture, it supports programmability without centralisation and automation without loss of accountability. In doing so, it reframes programmability as a governance choice rather than a technological one.

Programmable finance will not succeed by replacing institutions. It will succeed by strengthening them, provided trust is designed into the infrastructure from the start.

References

1. Bank for International Settlements. Annual Economic Report 2024: The Next-Generation Monetary and Financial System. Basel: BIS, 2024.

2. Bank for International Settlements. Committee on Payments and Market Infrastructures. Central Bank Digital Currencies and Payments Infrastructure. Basel: BIS, 2023.

3. Reserve Bank of India. Concept Note on Central Bank Digital Currency. Mumbai: RBI, 2022.

4. Reserve Bank of India. Annual Report 2023–24. Mumbai: RBI, 2024.

5. World Economic Forum. Programmable Payments: Connecting Value and Policy. Geneva: WEF, 2024.

6. International Monetary Fund. Tokenization and Financial Market Infrastructure. IMF Global Financial Stability Note, Washington DC, 2024.

7. European Central Bank. Wholesale Central Bank Digital Currency and Settlement Efficiency. Frankfurt: ECB Occasional Paper, 2023.