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Contemporaneous financial intermediation

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  • Markus Merz

    (University of Tuebingen)

Abstract

Digital innovations in banking and payments recently have garnered a great deal of attention. Specifically, distributed ledger technology (DLT) has the potential to fundamentally change the roles and responsibilities of stakeholders in the financial sector. DLT is a novel and fast-evolving approach to record and share data, e.g., payment transactions, among members of a decentralized network. Using transaction cost theory, the paper examines how DLT will change the cross-border payment infrastructure. DLT can reduce the overall transaction costs potentially resulting in the disappearance of correspondent banks.

Suggested Citation

  • Markus Merz, 2021. "Contemporaneous financial intermediation," Digital Finance, Springer, vol. 3(1), pages 25-44, March.
    • Handle: RePEc:spr:digfin:v:3:y:2021:i:1:d:10.1007_s42521-021-00029-3
    DOI: 10.1007/s42521-021-00029-3
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    More about this item

    Keywords

    Distributed ledger technology; Cross-border payments; Transaction costs; Correspondent banking; Ripple; Intermediation;
    All these keywords.

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • P51 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems - - - Comparative Analysis of Economic Systems

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