What is programmable money?

Alexander Lee of Federal Reserve in this research:

Discussions of financial technology have recently started to include the idea of “programmable money,” though the specific meaning of the term is often unclear. Different perspectives may presume a particular underlying technology or set of features to be a part of a programmable money system, and lack of agreement on these aspects may lead to confusion. To support clearer discussion of this concept in the central banking community and the financial industry more broadly, this research note offers an investigation into the nature of programmable money.

This note focuses on the importance of a mechanism guaranteeing the inseparable functionality of the technical components of a programmable money system rather than prescribing the specific nature of those components. This “coherence guarantee” is crucial regardless of specific technical choices and admits a wide range of potential designs for programmable money. The guarantee also facilitates the view of programmable money as a concrete product, which may provide users with greater certainty about its nature and capabilities than alternative service-oriented models that can automate interaction with particular digital value records.