Programmable Money and the Future of Monetary Policy Transmission: Mechanisms, Vulnerabilities, and Macroeconomic Implications

Programmable money—central bank digital currencies, tokenised deposits and stablecoins whose behaviour can be conditioned by embedded code—is moving from experiment to infrastructure. As these instruments spread, the question for monetary authorities is no longer whether they will exist but how they will alter the transmission of monetary policy. This paper addresses that question through a qualitative research design. It applies qualitative document analysis and thematic synthesis to a purposively selected body of peer-reviewed studies, central bank and international organisation reports, and legal texts published between 2017 and mid-2026, complemented by an illustrative case of Vietnam. The analysis yields an instrument-neutral framework in which four design dimensions—remuneration, deposit mobility, convenience and currency of denomination—shape the interest rate, bank lending, implementation and exchange rate channels. Four propositions emerge. Programmable money is neutral for credit conditions only where banks can replace lost deposits without friction. The strength and predictability of pass-through depend on how closely the remuneration of programmable money follows the policy rate. Highly convenient or foreign-currency programmable money tightens financial conditions structurally and imports foreign monetary conditions, a mechanism termed here digital dollarisation. Finally, extensive programmability of public money erodes the trust on which transmission relies. The paper maps four vulnerabilities—structural disintermediation, run dynamics, digital dollarisation, and operational or governance failure—onto these channels and discusses the implications for output, inflation and financial stability, particularly in emerging economies. It concludes that the monetary consequences of programmable money are a matter of design rather than of technology.