A Multi-Currency Exchange and Contracting Platform

A Multi-Currency Exchange and Contracting Platform
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Volume/Issue: Volume 2022 Issue 217
Publication date: November 2022
ISBN: 9798400224188
$20.00
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Topics covered in this book

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Finance , Economics- Macroeconomics , Money and Monetary Policy , Economics / General , 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

Summary

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.