A Multi-Currency Exchange and Contracting Platform

By Tobias Adrian, Federico Grinberg, Tommaso Mancini Griffoli, Robert M. Townsend, Nicolas Zhang

November 4, 2022

Preview Citation

Format: Chicago

Tobias Adrian, Federico Grinberg, Tommaso Mancini Griffoli, Robert M. Townsend, and Nicolas Zhang. A Multi-Currency Exchange and Contracting Platform, (USA: International Monetary Fund, 2022) accessed November 14, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

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.

Subject: Currencies, Currency markets, Financial markets, Financial statements, Foreign exchange, Money, Public financial management (PFM), Smart contracts, Technology

Keywords: CBDC, Cross-border payment, Cross-border payments, Currencies, Currency markets, Digital money, Encryption, Exchange-market illiquidity, Financial statements, Global, Hedging risk, Market design, Multilateral platforms, Programmability, Risk sharing, Smart contracts

Publication Details

Pages:

57
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2022/217
Stock No:

WPIEA2022217
ISBN:

9798400224188
ISSN:

1018-5941

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