Cross-border Financial News

The search for such a solution is as "old as international commerce and the implied need to pay," but could be found within the next 10 years.The ECB explores several options for achieving this, including correspondent banking, emerging fintech services, bitcoin, stablecoins, the interlinking of domestic payment systems, and CBDCs.The paper concludes that interlinking domestic systems and CBDCs, both interlinked cross-border through an FX conversion layer, are the most promising avenues.Listing the benefits, the authors write: "(i) technical feasibility; (ii) relative simplicity in their architecture; and (iii) maintaining a competitive and open architecture by avoiding the dominance of a small number of market participants who would eventually exploit their market power.

A recent study conducted by the European Central Bank (ECB) on identifying the ultimate cross-border payment medium crowned central bank digital currencies (CBDCs) as the winner against competitors, including banking, Bitcoin (BTC) and stablecoins, among others.

While domestic digital payment usage surged during the pandemic, the EIU expects this to slow over the next five years, largely owing to strong base effects. However, customers are increasingly demanding a similar revolution in cross-border payments, which are still mostly facilitated by the "old-fashioned" and "cumbersome" correspondent banking network. At the centre of this is Swift, which the paper notes has "encountered criticism for its relative inflexibility and lack of transparency" and seen a decline in the number of correspondent banking relationships over the last decade. More recently, Russian has been kicked off the Swift network, a move which could see the country and others such as China and India double down on their nascent Swift alternatives. Nevertheless, the paper says "setting up and scaling a full-fledged alternative bank-messaging system would be expensive and time consuming. It would also have limited real-world impact, given the prevalence of dollar-denominated cross-border flows. Swift will remain the dominant network, as long as countries and lenders come together to improve the Belgian network." Separately, cross-border payments will be disrupted by government-backed efforts to link systems. In Asia, moves are already underway to do this, allowing travellers across the region to purchase goods and services by scanning QR codes. As well as challenging Swift, disrupting cross-border payments will mean adopting emerging technologies, including blockchain, APIs and tokenisation, says the EIU.

UK think tank calls for global digital currency rules

Russia’s central bank governor Elvira Nabiullina is the latest official to confirm that the country is warming to the idea of cryptocurrency payments, but not domestic ones.

South African central bank eyes digital rand to cut cross-border payment costs

The Reserve Bank of India (RBI) is in the process of designing a framework for the launch of a central bank digital currency (CBDC) in 2023. A CBDC is essentially legal tender issued in a digital form distinct from a private cryptocurrency, which does not have a sovereign legal backing.

Remittance payments are at an all-time high due to the COVID-19 pandemic. To paint the picture, Mexico’s payments alone have amounted to more than $50 billion, surpassing all other sources of foreign income. This value represents only a subset of the estimated $540 billion reported in 2021.

Cross border remittances are a matter of life and death as the Russia-Ukraine war and Afghanistan’s frozen funds have shown us. However, there are plenty of high-stakes use cases for crypto investors even in less precarious financial situations.

The project was organised along three workstreams: one focusing on high-level functional requirements and design, and two concurrent technical streams that developed prototypes on the Corda and Partior blockchain platforms.Andrew McCormack, head of the BIS Innovation Hub Centre in Singapore, says: "A common platform is the most efficient model for payments connectivity but is also the most challenging to achieve. Project Dunbar demonstrated that key concerns of trust and shared control can be addressed through governance mechanisms enforced by robust technological means, laying the foundation for the development of future global and regional platforms."Michele Bullock, assistant governor, Reserve Bank of Australia, adds: "Allowing entities to directly hold and transact in CBDCs from different jurisdictions could reduce the need for intermediaries in cross-border payments, but it would need to be done in a way that preserves the security and resilience of these payments.

The European Commission announced to remove a number of Russian banks from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) messaging system, aimed at hindering Russia’s capacity to carry out cross-border payments. 

Enterprise payment platform Tribal Credit has partnered with Latin American crypto exchange Bitso and the Stellar Development Foundation to create a new cross-border payment service for businesses, opening the door to broader use cases for blockchain technology in the region.

Utilising the Hedera Token Service (HTS) and Hedera Consensus Service (HCS), the project aims to test the issuance and distribution of stablecoins, applied to a financial use case that typically suffers from high fees, longer waits and absence of tracking feature.

WASHINGTON—Democrats are close to passing significant changes to international corporate taxation, moving toward a system that would reduce the gaps between nations’ tax rates and—if it all works as planned—making taxes a less important consideration for where companies put investments, profits and headquarters.

Mainstream institutional and retail adoption of cryptocurrencies has been on the rise over the past couple of years. However, ground realities indicate that a major lag in acceptance still exists within major institutions. Financial institutions are lagging behind in providing customers with B2B cross-border payment options in cryptocurrencies, according to a new study.

Cryptocurrencies appear to be far from ready for business-to-business (B2B) commerce so far due to factors like lack of convenience, a new survey suggests.

Every day, we see traditional financial institutions scrambling to figure out its crypto strategy, and understandably so. Crypto is past the tipping point of mainstream consciousness. Its use cases like cross-border payments are firmly outside of the sandbox stage.