The International Monetary Fund (IMF) has urged policymakers to modernise payment systems and strengthen regulatory frameworks as artificial intelligence (AI) reshapes financial transactions, cross-border payments and financial stability.

Speaking at Sibos 2026 on Monday, the IMF’s First Deputy Managing Director, Dan Katz, said AI-powered agents could reduce transaction costs, increase competition among financial service providers and automate complex payments.

He said such developments 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 for autonomous AI agents capable of conducting transactions continuously and at scale.

He said 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.

The technology, he added, could automate regulatory compliance, customer due diligence, sanctions screening and reporting, particularly in cross-border transactions involving different currencies and regulatory requirements.

According to him, AI could also 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.

Katz, however, said the benefits would depend on investment in digital infrastructure, stronger interoperability and regulatory frameworks capable of accommodating emerging technologies.

He said tokenisation could support the next generation of payment systems by enabling programmable transactions and faster settlement.

The transition, however, would require clear legal frameworks defining ownership rights, asset protection and the relationship between digital tokens and their underlying assets.

Policymakers, he added, must also address liquidity requirements and ensure that new payment technologies do not undermine financial stability.

Katz said central banks could explore new forms of digital money, including tokenised reserves, while governments could consider issuing public debt instruments in tokenised forms.

He urged regulators to account for individual countries’ economic circumstances and allow different technologies to compete.

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.

Katz also warned that the growing use of AI could increase cybersecurity risks as financial institutions become more dependent on shared digital infrastructure and third-party technology providers.

He called for stronger governance, technical safeguards, effective incident-response systems and greater coordination among regulators, governments and private-sector operators.

On AI regulation, he 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 said regulatory interventions should be proportionate, targeted and internationally coordinated to balance innovation with financial stability.