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A Multi-Currency Exchange and Contracting Platform
Author:
Mr. Tobias Adrian
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https://orcid.org/0000-0001-9379-9592
,
Federico Grinberg https://isni.org/isni/0000000404811396 International Monetary Fund

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Mr. Tommaso Mancini Griffoli
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Robert M. Townsend https://isni.org/isni/0000000404811396 International Monetary Fund

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Nicolas Zhang
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Series:
IMF Working Papers
Volume/Issue:
Volume 2022: Issue 217
Language:
English
Publication Date:
04 Nov 2022
DOI:
https://doi.org/10.5089/9798400224188.001
ISBN:
9798400224188
ISSN:
1018-5941
Pages:
57
Keywords:
Cross-border payments; multilateral platforms; digital money; CBDC; programmability; encryption; exchange-market illiquidity; risk sharing; market design; hedging risk; cross-border payment; Smart contracts; Currencies; Currency markets; Financial statements; Global
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Cross-border payments can be slow, expensive, and risky. They are intermediated by counterparties in different jurisdictions which rely on costly trusted relationships to offset the lack of a common settlement asset as well as common rules and governance. In this paper, we present a vision for a multilateral platform that could improve cross-border payments, as well as related foreign exchange transactions, risk sharing, and more generally, financial contracting. The approach is to leverage technological innovations for public policy objectives. A common ledger, smart contracts, and encryption offer significant gains to market efficiency, completeness, and access, as well as to transparency, transaction and compliance costs, and safety. This paper is a first step aiming to stimulate further work in this space.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund