IDEAS home Printed from https://ideas.repec.org/p/ecb/ecbwps/20222693.html
   My bibliography  Save this paper

Towards the holy grail of cross-border payments

Author

Listed:
  • Bindseil, Ulrich
  • Pantelopoulos, George

Abstract

The holy grail of cross-border payments is a solution allowing cross-border payments to be immediate, cheap, universal, and settled in a secure settlement medium. The search for such a solution is as old as international commerce and the implied need to pay. This paper describes current visions how to eventually find this holy grail within the next decade, namely through (i) modernized correspondent banking; (ii) emerging cross-border FinTech solutions; (iii) Bitcoin; (iv) global stablecoins; (v) interlinked instant payment systems with FX conversion layer; (vi) interlinked CBDC with FX conversion layer. For each, settlement mechanics are explained, and an assessment is provided on its potential to be the holy grail of cross-border payments. Several solutions are suitable for improving cross-border payments significantly, and some could even be the holy grail. JEL Classification: E42, E58, F31

Suggested Citation

  • Bindseil, Ulrich & Pantelopoulos, George, 2022. "Towards the holy grail of cross-border payments," Working Paper Series 2693, European Central Bank.
    • Handle: RePEc:ecb:ecbwps:20222693
    Note: 327704
    as

    Download full text from publisher

    File URL: https://www.ecb.europa.eu//pub/pdf/scpwps/ecb.wp2693~8d4e580438.en.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Gai, Prasanna & Kapadia, Sujit, 2010. "Contagion in financial networks," Bank of England working papers 383, Bank of England.
    2. Jim Bolton & Francesco Guidi‐Bruscoli, 2021. "‘Your flexible friend’: the bill of exchange in theory and practice in the fifteenth century," Economic History Review, Economic History Society, vol. 74(4), pages 873-891, November.
    3. Keynes, John Maynard, 1919. "The Economic Consequences of the Peace," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, number keynes1919.
    4. Bindseil, Ulrich, 2020. "Tiered CBDC and the financial system," Working Paper Series 2351, European Central Bank.
    5. Tara Rice & Goetz von Peter & Codruta Boar, 2020. "On the global retreat of correspondent banks," BIS Quarterly Review, Bank for International Settlements, March.
    6. Adachi, Mitsutoshi & Cominetta, Matteo & Kaufmann, Christoph & van der Kraaij, Anton, 2020. "A regulatory and financial stability perspective on global stablecoins," Macroprudential Bulletin, European Central Bank, vol. 10.
    7. Massimiliano Renzetti & Serena Bernardini & Giuseppe Marino & Luca Mibelli & Laura Ricciardi & Giovanni Maria Sabelli, 2021. "TIPS - TARGET Instant Payment Settlement The Pan-European Infrastructure for the Settlement of Instant Payments," Mercati, infrastrutture, sistemi di pagamento (Markets, Infrastructures, Payment Systems) 1, Bank of Italy, Directorate General for Markets and Payment System.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Bindseil, Ulrich & Pantelopoulos, George, 2022. "A brief history of payment netting and settlement," IBF Paper Series 02-22, IBF – Institut für Bank- und Finanzgeschichte / Institute for Banking and Financial History, Frankfurt am Main.
    2. Luzie Thiel & Jochen Michaelis, 2023. "Digitales Zentralbankgeld: Warum wagt niemand den ersten Schritt?," MAGKS Papers on Economics 202315, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    3. George Pantelopoulos, 2024. "Can external sustainability be decoupled from the NIIP?," International Economics and Economic Policy, Springer, vol. 21(1), pages 89-116, February.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Raphael Auer & Codruta Boar & Giulio Cornelli & Jon Frost & Henry Holden & Andreas Wehrli, 2021. "CBDCs beyond borders: results from a survey of central banks," BIS Papers, Bank for International Settlements, number 116.
    2. Castrén, Olli & Kavonius, Ilja Kristian & Rancan, Michela, 2022. "Digital currencies in financial networks," Journal of Financial Stability, Elsevier, vol. 60(C).
    3. Raphael Auer & Philipp Haene & Henry Holden, 2021. "Multi-CBDC arrangements and the future of cross-border payments," BIS Papers, Bank for International Settlements, number 115.
    4. Bindseil, Ulrich & Pantelopoulos, George, 2022. "A brief history of payment netting and settlement," IBF Paper Series 02-22, IBF – Institut für Bank- und Finanzgeschichte / Institute for Banking and Financial History, Frankfurt am Main.
    5. Jörg Bibow, 2018. "How Germany’s anti-Keynesianism has brought Europe to its knees," International Review of Applied Economics, Taylor & Francis Journals, vol. 32(5), pages 569-588, September.
    6. Bargigli, Leonardo & Gallegati, Mauro, 2011. "Random digraphs with given expected degree sequences: A model for economic networks," Journal of Economic Behavior & Organization, Elsevier, vol. 78(3), pages 396-411, May.
    7. Fariba Karimi & Matthias Raddant, 2016. "Cascades in Real Interbank Markets," Computational Economics, Springer;Society for Computational Economics, vol. 47(1), pages 49-66, January.
    8. Marianna Astore & Michele Fratianni, 2016. ""We can't pay": How Italy cancelled war debts after Lausanne," Mo.Fi.R. Working Papers 129, Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences.
    9. Miao He & Yanhong Guo, 2022. "Systemic Risk Contributions of Financial Institutions during the Stock Market Crash in China," Sustainability, MDPI, vol. 14(9), pages 1-14, April.
    10. Massimo Di Matteo, 2016. "Un ricordo di Marcello de Cecco," STUDI ECONOMICI, FrancoAngeli Editore, vol. 2016(118-119-1), pages 59-68.
    11. Kuzubaş, Tolga Umut & Saltoğlu, Burak & Sever, Can, 2016. "Systemic risk and heterogeneous leverage in banking networks," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 462(C), pages 358-375.
    12. Geoffrey Goodell & Hazem Danny Al-Nakib & Paolo Tasca, 2021. "A Digital Currency Architecture for Privacy and Owner-Custodianship," Future Internet, MDPI, vol. 13(5), pages 1-28, May.
    13. T. Gerasimos S. & V. Erotokritos & Т. Герасимос С. & В. Эротокритос, 2017. "Предварительный поведенческий подход в таргетированию реальных доходов // A Tentative Behavioral Approach to Real Income Targeting," Review of Business and Economics Studies // Review of Business and Economics Studies, Финансовый Университет // Financial University, vol. 5(1), pages 17-31.
    14. Angelo Federico Arcelli & Reiner Stefano Masera & Giovanni Tria, 2021. "Da Versailles a Bretton Woods e ai giorni nostri: errori storici e modelli ancora attuali per un sistema monetario internazionale sostenibile (From Bretton Woods to our days: Historic mistakes and mod," Moneta e Credito, Economia civile, vol. 74(296), pages 249-273.
    15. Kobayashi, Teruyoshi & Takaguchi, Taro, 2018. "Identifying relationship lending in the interbank market: A network approach," Journal of Banking & Finance, Elsevier, vol. 97(C), pages 20-36.
    16. Polanski, Arnold & Stoja, Evarist, 2017. "Forecasting multidimensional tail risk at short and long horizons," International Journal of Forecasting, Elsevier, vol. 33(4), pages 958-969.
    17. Gabrielle Demange, 2018. "Contagion in Financial Networks: A Threat Index," Management Science, INFORMS, vol. 64(2), pages 955-970, February.
    18. Lara Mónica Machado Fernandes & Maria Rosa Borges, 2013. "Interbank Linkages and Contagion Risk in the Portuguese Banking System," Working Papers Department of Economics 2013/23, ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa.
    19. Paulo Ferreira & Éder J.A.L. Pereira & Hernane B.B. Pereira, 2020. "From Big Data to Econophysics and Its Use to Explain Complex Phenomena," JRFM, MDPI, vol. 13(7), pages 1-10, July.
    20. J. Nassios & J.A. Giesecke, 2015. "The Macroeconomic and Sectoral Effects of Terrorism in the U.S.: A Reconciliation of CGE and Econometric Approaches," Centre of Policy Studies/IMPACT Centre Working Papers g-256, Victoria University, Centre of Policy Studies/IMPACT Centre.

    More about this item

    Keywords

    bitcoin; CBDC; correspondent banking; cross-currency payments; interlinking; stablecoins;
    All these keywords.

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • F31 - International Economics - - International Finance - - - Foreign Exchange

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ecb:ecbwps:20222693. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Official Publications (email available below). General contact details of provider: https://edirc.repec.org/data/emieude.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.