A Multi-Currency Exchange and Contracting Platform

Tobias Adrian, Federico Grinberg, Tommaso Mancini-Griffoli, Robert Townsend and Nicolas Zhang

No 2022/217, IMF Working Papers from International Monetary Fund

Abstract: 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.

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 (search for similar items in EconPapers)
Pages: 57
Date: 2022-11-04
New Economics Papers: this item is included in nep-pay
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