cross-border payments

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The Future of Money: How the Digital Revolution Is Transforming Currencies and Finance by Eswar S. Prasad

access to a mobile phone, Adam Neumann (WeWork), Airbnb, algorithmic trading, altcoin, bank run, barriers to entry, Bear Stearns, Ben Bernanke: helicopter money, Bernie Madoff, Big Tech, bitcoin, Bitcoin Ponzi scheme, Bletchley Park, blockchain, Bretton Woods, business intelligence, buy and hold, capital controls, carbon footprint, cashless society, central bank independence, cloud computing, coronavirus, COVID-19, Credit Default Swap, cross-border payments, cryptocurrency, deglobalization, democratizing finance, disintermediation, distributed ledger, diversified portfolio, Dogecoin, Donald Trump, Elon Musk, Ethereum, ethereum blockchain, eurozone crisis, fault tolerance, fiat currency, financial engineering, financial independence, financial innovation, financial intermediation, Flash crash, floating exchange rates, full employment, gamification, gig economy, Glass-Steagall Act, global reserve currency, index fund, inflation targeting, informal economy, information asymmetry, initial coin offering, Internet Archive, Jeff Bezos, Kenneth Rogoff, Kickstarter, light touch regulation, liquidity trap, litecoin, lockdown, loose coupling, low interest rates, Lyft, M-Pesa, machine readable, Mark Zuckerberg, Masayoshi Son, mobile money, Money creation, money market fund, money: store of value / unit of account / medium of exchange, Network effects, new economy, offshore financial centre, open economy, opioid epidemic / opioid crisis, PalmPilot, passive investing, payday loans, peer-to-peer, peer-to-peer lending, Peter Thiel, Ponzi scheme, price anchoring, profit motive, QR code, quantitative easing, quantum cryptography, RAND corporation, random walk, Real Time Gross Settlement, regulatory arbitrage, rent-seeking, reserve currency, ride hailing / ride sharing, risk tolerance, risk/return, Robinhood: mobile stock trading app, robo advisor, Ross Ulbricht, Salesforce, Satoshi Nakamoto, seigniorage, Sheryl Sandberg, Silicon Valley, Silicon Valley startup, smart contracts, SoftBank, special drawing rights, the payments system, too big to fail, transaction costs, uber lyft, unbanked and underbanked, underbanked, Vision Fund, Vitalik Buterin, Wayback Machine, WeWork, wikimedia commons, Y Combinator, zero-sum game

In November 2019, the MAS announced the successful development of a blockchain-based prototype to enable payments in various currencies on the same network. These projects seem to be making progress in using DLT to improve domestic and cross-border payments (payment-versus-payment) and securities transactions (DvP). One open question, as the MAS puts it, is “whether advanced liquidity management techniques might introduce new risks.” Cross-border Payments Cross-border payments, which are necessitated by trade and financial transactions across national borders, constitute a big business. For instance, the total value of international trade in goods and commercial services alone was $25 trillion in 2019.

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Correspondent banks either run operations in multiple countries or form direct relationships with banks in other countries to facilitate these operations. Despite rising demand for cross-border payment services, the number of active correspondent banks globally is in decline. From 2011 to 2018, their number declined by 20 percent even as the value of cross-border payments increased by 15 percent. This is a bad omen for the cost, speed, and transparency of international money transfers, which already face a multitude of hurdles. The Complications Cross-border payments are inherently complicated. They involve multiple currencies, must often be routed through several institutions, and need to be consistent with country-specific financial regulations.

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It is an intriguing proposition that innovations in finance can create pathways to maneuver around these constraints and thereby reduce the government’s direct involvement in financial markets. These possibilities and the effects that such developments might have on financial stability will be explored later in this book. Cross-border Payments Cross-border payments are necessitated by trade and financial transactions across countries. When a wine importer in New York purchases a shipment of Cabernet Sauvignon from a winemaker in Chile, that importer instructs his bank to transfer the agreed-upon funds to the winemaker’s Chilean bank account.

The Pay Off: How Changing the Way We Pay Changes Everything by Gottfried Leibbrandt, Natasha de Teran

"World Economic Forum" Davos, Alan Greenspan, Ayatollah Khomeini, bank run, banking crisis, banks create money, Bear Stearns, Big Tech, bitcoin, blockchain, call centre, cashless society, Clayton Christensen, cloud computing, coronavirus, COVID-19, Credit Default Swap, cross-border payments, cryptocurrency, David Graeber, Donald Trump, Edward Snowden, Ethereum, ethereum blockchain, financial exclusion, global pandemic, global reserve currency, illegal immigration, information asymmetry, initial coin offering, interest rate swap, Internet of things, Irish bank strikes, Julian Assange, large denomination, light touch regulation, lockdown, low interest rates, M-Pesa, machine readable, Money creation, money: store of value / unit of account / medium of exchange, move fast and break things, Network effects, Northern Rock, off grid, offshore financial centre, payday loans, post-industrial society, printed gun, QR code, RAND corporation, ransomware, Real Time Gross Settlement, reserve currency, Rishi Sunak, Silicon Valley, Silicon Valley startup, Skype, smart contracts, sovereign wealth fund, special drawing rights, tech billionaire, the payments system, too big to fail, transaction costs, WikiLeaks, you are the product

Agreeing an agenda for the 2020 summit was never going to be easy, but one thing all participants agreed on was the need to improve cross-border payments. According to the G20: ‘Faster, cheaper, more transparent and more inclusive cross-border payment services, including remittances, would have widespread benefits for citizens and economies worldwide, supporting economic growth, international trade, global development and financial inclusion.’ In such a fractured geopolitical landscape and testing economic environment, it remains to be seen how quickly both governments and the private sector will act on their commitment to the cause. But the trajectory is undoubtedly towards making cross-border payments cheaper, faster and more transparent for everyone, especially the smaller users.

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Bank rankings from: https://www.spglobal.com/marketintelligence/en/news-insights/trending/robdlgca1gbjyjrx3sdcjg2 For the story on why KfW became known as Germany’s dumbest bank, see: www.nytimes.com/2008/09/18/business/worldbusiness/18iht-kfw.4.16285369.html For the Alphaville comments on the CHAPS outage, see: https://ftalphaville.ft.com/2016/01/29/2151327/rtgs-and-the-story-of-batches-instead-of-blocks/ The value ofJPMorgan wholesale payments is taken from: www.jpmorganchase.com/corporate/investor-relations/document/line-of-business-ceo-letters-to-shareholders-2018.pdf Chapter 17 For the reputation of cross-border payments, see: M.L. Bech and J. Hancock (2020). ‘Innovations in payments’, BIS Quarterly Review, March, 21–36. The authors describe cross-border payments as ‘slower, more expensive and more opaque’. The IMF, according to a speech given by its deputy director, Dong He, sees them as ‘costly and cumbersome . . . opaque and slow’ (www.imf.org/en/News/Articles/2017/11/01/sp103017-fintech-and-cross-border-payments). For Hawala volume estimates, see: http://www.treas.gov/offices/enforcement/key-issues/hawala/; www.un.org/esa/desa/papers/2002/esa02dp26.pdf (calculation based on TransferWise’s published statistic of £5 billion per month in transfers).

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Having led the expansion of the American steel industry in the late nineteenth century, he became one of the richest Americans in history. 17. If money never moves, how do you send it abroad? Cross-border payments are the payments that everyone loves to hate. They are routinely described as expensive, slow and opaque. And as anybody who has tried to send a couple of hundred dollars halfway across the world can confirm, this reputation is not undeserved. Cross-border payments can involve obscure bank codes, unrecognisable account formats and requests for details that appear completely irrelevant to the task at hand. If you’ve ever sent one you might recall needing to indicate who bears the charges, which can be substantial.

Digital Bank: Strategies for Launching or Becoming a Digital Bank by Chris Skinner

algorithmic trading, AltaVista, Amazon Web Services, Any sufficiently advanced technology is indistinguishable from magic, augmented reality, bank run, Basel III, bitcoin, Bitcoin Ponzi scheme, business cycle, business intelligence, business process, business process outsourcing, buy and hold, call centre, cashless society, clean water, cloud computing, corporate social responsibility, credit crunch, cross-border payments, crowdsourcing, cryptocurrency, demand response, disintermediation, don't be evil, en.wikipedia.org, fault tolerance, fiat currency, financial innovation, gamification, Google Glasses, high net worth, informal economy, information security, Infrastructure as a Service, Internet of things, Jeff Bezos, Kevin Kelly, Kickstarter, M-Pesa, margin call, mass affluent, MITM: man-in-the-middle, mobile money, Mohammed Bouazizi, new economy, Northern Rock, Occupy movement, Pingit, platform as a service, Ponzi scheme, prediction markets, pre–internet, QR code, quantitative easing, ransomware, reserve currency, RFID, Salesforce, Satoshi Nakamoto, Silicon Valley, smart cities, social intelligence, software as a service, Steve Jobs, strong AI, Stuxnet, the long tail, trade route, unbanked and underbanked, underbanked, upwardly mobile, vertical integration, We are the 99%, web application, WikiLeaks, Y2K

Michael (Mike) Laven, CEO of Currency Cloud is one of the latter visionaries, and is changing the game in cross-border payments by building a cloud-based offer for currency movements and offering this as a low-cost, transparent service to consumers and small businesses. What is the Currency Cloud? There is a huge volume of cross-border transactions that are well served for the large, multinational firms, but a major, untapped and underserved market for the cross-border payments needs of smaller firms. The Currency Cloud is a start up company in the world of cross-border payments that addresses these companies’ needs. We believe that the need to make cross-border payments has become globally ubiquitous.

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Finally, for our back office operations, we focus upon resilience and security and we need it to be approved by our auditors. I am not sure they would be happy if I came up with a cloud offer today. But you have a lot of partner relationships where you let your partners’ process on your behalf, such as the Currency Cloud for cross-border payments. Is that not the same as using cloud? But in the context of those relationships, we are the cloud. It’s not something where we are putting our bank services in a cloud computing operation like Amazon. So it depends how you define cloud. Yes. There are very many ways of talking about cloud, and I am referring here to placing my operating systems and bank data in the cloud.

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What they will have to do is stop using that system, come out of that system, go to another screen or pick up the telephone to connect to their bank and then perform the transaction. As they do the transaction with their bank, the bank will often process that transaction through their own proprietary network. What we do is ensure that they do not have to be faced with these breaks in processing by integrating all cross-border payments through our API into their business flow. We also bring a whole world of connectivity for the individual customer to a range of different sources of liquidity providers and payment platforms that are optimised for those customers. The cloud nature of our service brings this very large network of currency transactions and payment services that we connect back to the customer.

Mastering Blockchain: Unlocking the Power of Cryptocurrencies and Smart Contracts by Lorne Lantz, Daniel Cawrey

air gap, altcoin, Amazon Web Services, barriers to entry, bitcoin, blockchain, business logic, business process, call centre, capital controls, cloud computing, corporate governance, creative destruction, cross-border payments, cryptocurrency, currency peg, disinformation, disintermediation, distributed ledger, Dogecoin, Ethereum, ethereum blockchain, fault tolerance, fiat currency, Firefox, global reserve currency, information security, initial coin offering, Internet of things, Kubernetes, litecoin, low interest rates, Lyft, machine readable, margin call, MITM: man-in-the-middle, multilevel marketing, Network effects, offshore financial centre, OSI model, packet switching, peer-to-peer, Ponzi scheme, prediction markets, QR code, ransomware, regulatory arbitrage, rent-seeking, reserve currency, Robinhood: mobile stock trading app, Ross Ulbricht, Satoshi Nakamoto, Silicon Valley, Skype, smart contracts, software as a service, Steve Wozniak, tulip mania, uber lyft, unbanked and underbanked, underbanked, Vitalik Buterin, web application, WebSocket, WikiLeaks

Ripple has hundreds of partnerships with various companies in the banking and payments sectors. The best-known strategic partnership is with the money remittances company MoneyGram, in which Ripple has made a $50 million equity investment. MoneyGram uses Ripple’s On-Demand Liquidity product to facilitate cheaper and faster cross-border payments. Stellar Launched in 2014, Stellar was founded by Jed McCaleb and Joyce Kim, who had both previously worked at Ripple. The Stellar protocol is supported by the 501(c)(3) nonprofit Stellar Development Foundation, created with the aim of providing a low-cost payment network for underbanked or unbanked individuals across the world.

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One of the reasons for switching from the Ripple-designed consensus mechanism was that the Stellar blockchain unexpectedly forked in 2014, creating two separate networks and causing problems with transactions. After the departure of Joyce Kim, the Foundation began a long pivot, founding a company called Lightyear.io in 2017 (which became Interstellar in 2018 after acquiring the blockchain company Chain) to promote and encourage adoption of the protocol. Like Ripple, Stellar is focusing on cross-border payments, albeit with a more unbanked and underbanked bent, attempting to provide services to those who lack financial access. Scaling Blockchains In technology terms, scaling is the ability of a network to dynamically change resource allocation while improving or maintaining efficiency. Scaling has been a challenge as Bitcoin has grown: as more transactions end up on the blockchain, the network needs to continue providing a cheap and easy way to transact.

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Figure 9-4. Design for the Boston Fed test—in Hyperledger, “chaincode” is a smart contract JPMorgan Investment bank JPMorgan has developed Quorum as its own blockchain based on Ethereum. It has also created its own stablecoin, JPC Coin. The cryptocurrency will be used as a method of making cross-border payments, which can be expensive and inefficient, via the Quorum blockchain. Users will be able to deposit fiat with the bank, be issued JPM Coin, and redeem it for fiat payment elsewhere. Permissioned Ledger Uses The use cases for permissioned systems are often very different from those of open blockchains.

The Blockchain Alternative: Rethinking Macroeconomic Policy and Economic Theory by Kariappa Bheemaiah

"World Economic Forum" Davos, accounting loophole / creative accounting, Ada Lovelace, Adam Curtis, Airbnb, Alan Greenspan, algorithmic trading, asset allocation, autonomous vehicles, balance sheet recession, bank run, banks create money, Basel III, basic income, behavioural economics, Ben Bernanke: helicopter money, bitcoin, Bletchley Park, blockchain, Bretton Woods, Brexit referendum, business cycle, business process, call centre, capital controls, Capital in the Twenty-First Century by Thomas Piketty, cashless society, cellular automata, central bank independence, Charles Babbage, Claude Shannon: information theory, cloud computing, cognitive dissonance, collateralized debt obligation, commoditize, complexity theory, constrained optimization, corporate governance, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, cross-border payments, crowdsourcing, cryptocurrency, data science, David Graeber, deep learning, deskilling, Diane Coyle, discrete time, disruptive innovation, distributed ledger, diversification, double entry bookkeeping, Ethereum, ethereum blockchain, fiat currency, financial engineering, financial innovation, financial intermediation, Flash crash, floating exchange rates, Fractional reserve banking, full employment, George Akerlof, Glass-Steagall Act, Higgs boson, illegal immigration, income inequality, income per capita, inflation targeting, information asymmetry, interest rate derivative, inventory management, invisible hand, John Maynard Keynes: technological unemployment, John von Neumann, joint-stock company, Joseph Schumpeter, junk bonds, Kenneth Arrow, Kenneth Rogoff, Kevin Kelly, knowledge economy, large denomination, Large Hadron Collider, Lewis Mumford, liquidity trap, London Whale, low interest rates, low skilled workers, M-Pesa, machine readable, Marc Andreessen, market bubble, market fundamentalism, Mexican peso crisis / tequila crisis, Michael Milken, MITM: man-in-the-middle, Money creation, money market fund, money: store of value / unit of account / medium of exchange, mortgage debt, natural language processing, Network effects, new economy, Nikolai Kondratiev, offshore financial centre, packet switching, Pareto efficiency, pattern recognition, peer-to-peer lending, Ponzi scheme, power law, precariat, pre–internet, price mechanism, price stability, private sector deleveraging, profit maximization, QR code, quantitative easing, quantitative trading / quantitative finance, Ray Kurzweil, Real Time Gross Settlement, rent control, rent-seeking, robo advisor, Satoshi Nakamoto, Satyajit Das, Savings and loan crisis, savings glut, seigniorage, seminal paper, Silicon Valley, Skype, smart contracts, software as a service, software is eating the world, speech recognition, statistical model, Stephen Hawking, Stuart Kauffman, supply-chain management, technology bubble, The Chicago School, The Future of Employment, The Great Moderation, the market place, The Nature of the Firm, the payments system, the scientific method, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, too big to fail, trade liberalization, transaction costs, Turing machine, Turing test, universal basic income, Vitalik Buterin, Von Neumann architecture, Washington Consensus

At about the same time that SWIFT was putting a call out for papers, Earthport partnered with Ripple, a company that helps construct quasi-private Blockchains for clients, to implement an instant cross-border payment system. Using Ripple’s blockchain-based RTGS**, Earthport launched the Distributed Ledger Hub (DLH), which provides its clients instant payments and liquidity, transaction cost efficiencies, a high standard of compliance control, and elimination of counter-party risk via pre-funding (Earthport, 2015). As stated by Jonathan Lear, Earthport’s President, “The world is getting smaller and payments needs to move faster… The legacy way of making cross-border payments, well there is only one way to describe it—it’s a real bloody mess….

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Nature , Scientific Reports 6, Article number: 26889, doi: 10.​1038/​srep26889 . PwC. (2016). Blurred Lines: How FinTech is shaping Financial Services . Pricewaterhouse Cooper. PYMNTS. (2015, August 18). How Earthport And Ripple Are Teaming Up To Make Cross-Border Payments Instant . Retrieved from PYMNTS: http://www.pymnts.com/in-depth/2015/how-earthport-and-ripple-are-teaming-up-to-make-cross-border-payments-instant/ Raval, S. (2016). Decentralized Applications - Harnessing Bitcoin’s Blockchain Technology . California: O’Reilly Media, Inc. . Rizzo, P. ( 2015, October 8). Ripple Releases Interledger to Connect Banks and Blockchains .

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In light of these services, banks have functioned as intermediaries that offset risk by acting as catalysts of cross-border trading. This has given rise to trade finance, which is a major source of revenue to banks. Trade finance is safe bet, as it provides a source of revenue that is independent of interest rates, provides cross-border payment fees, and has a low rate of default (up to 10 times lower than for traditional corporate lending (Accenture, 2016)). Together, supply chain management and trade finance provide market players with capital to produce and sell products and services within territories and across borders. However, in recent times, supply chain management and trade finance have come under increased scrutiny, which has resulted in processing delays and additional risks.

The Currency Cold War: Cash and Cryptography, Hash Rates and Hegemony by David G. W. Birch

"World Economic Forum" Davos, Alan Greenspan, algorithmic management, AlphaGo, bank run, Big Tech, bitcoin, blockchain, Bretton Woods, BRICs, British Empire, business cycle, capital controls, cashless society, central bank independence, COVID-19, cross-border payments, cryptocurrency, Diane Coyle, disintermediation, distributed ledger, Donald Trump, driverless car, Elon Musk, Ethereum, ethereum blockchain, facts on the ground, fault tolerance, fiat currency, financial exclusion, financial innovation, financial intermediation, floating exchange rates, forward guidance, Fractional reserve banking, global reserve currency, global supply chain, global village, Hyman Minsky, information security, initial coin offering, Internet of things, Jaron Lanier, Kenneth Rogoff, knowledge economy, M-Pesa, Mark Zuckerberg, market clearing, market design, Marshall McLuhan, mobile money, Money creation, money: store of value / unit of account / medium of exchange, moral hazard, Network effects, new economy, Northern Rock, one-China policy, Overton Window, PalmPilot, pattern recognition, Pingit, QR code, quantum cryptography, race to the bottom, railway mania, ransomware, Real Time Gross Settlement, reserve currency, Satoshi Nakamoto, seigniorage, Silicon Valley, smart contracts, social distancing, sovereign wealth fund, special drawing rights, subscription business, the payments system, too big to fail, transaction costs, Vitalik Buterin, Washington Consensus

Ever since the financial crisis of 2008, top economic thinkers have been warning that imbalances in the global economy are putting stress on the International Monetary and Financial System. By some measures, the US dollar’s central role in that system – in place since the Bretton Woods Agreement of 1944 – has never been stronger. As reflected in its overwhelming dominance when it comes to total central bank reserves, cross-border payments, foreign exchange trades and, most significantly, international corporate assets and liabilities, the greenback is more powerful than ever. But the world’s concentrated dependence on the US dollar is actually the system’s core weakness. It means that in moments of crisis, the US Federal Reserve (Fed) feels compelled to act not only as a lender of last resort to US banks, but also – in contradiction to its domestic economic mandate – as the ultimate financial backstop to the entire world.

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I assume that Carney was thinking of these kinds of ‘official’ ACUs when he said (Jeffery and Hinge 2019): We think Libra and other potential new payment solutions are shining a light on deficiencies in the system. And that is to be welcomed. They are trying to solve them. So domestic payments are still too slow and not distributed in real time. And cross-border payments are much worse. They cost a lot more and take a lot longer to execute. And that is just not necessary. It is a product of the old architecture. So coming up with new architecture and trying to solve it is a good thing. He went on to say that his central bank serves ‘the people of the United Kingdom through the financial system’ and that ‘we do not serve the banks and insurance companies per se, they are financial intermediaries that also serve the financial system’.

The Triumph of Injustice: How the Rich Dodge Taxes and How to Make Them Pay by Emmanuel Saez, Gabriel Zucman

activist fund / activist shareholder / activist investor, Affordable Care Act / Obamacare, behavioural economics, Berlin Wall, book value, business cycle, carbon tax, Cass Sunstein, classic study, collective bargaining, Cornelius Vanderbilt, corporate governance, cross-border payments, Donald Trump, financial deregulation, government statistician, income inequality, income per capita, independent contractor, informal economy, intangible asset, Jeff Bezos, labor-force participation, Lyft, Mark Zuckerberg, market fundamentalism, Mont Pelerin Society, mortgage debt, mortgage tax deduction, new economy, offshore financial centre, oil shock, patent troll, profit maximization, purchasing power parity, race to the bottom, rent-seeking, ride hailing / ride sharing, Ronald Reagan, shareholder value, Silicon Valley, single-payer health, Skype, Steve Jobs, Tax Reform Act of 1986, The Wealth of Nations by Adam Smith, transfer pricing, trickle-down economics, uber lyft, very high income, We are the 99%

These forms of depreciation logically should be subtracted from GDP but currently aren’t, although there are ongoing efforts to fix this flaw in economic statistics.2 The second adjustment to move from GDP to national income involves adding the income that the United States receives from abroad and subtracting what it pays to the rest of the world. In the 1950s and 1960s, when international capital markets were shut down, these international flows were negligible. Today, cross-border payments of interest and dividends are sizable. The United States pays 3.5% of its GDP to foreign countries—in the form of interest and dividends—and receives the equivalent of 5% of it from the rest of the world. On net it receives more than it pays. After removing depreciation and adding the net flows of foreign income, US national income reaches about $18.5 trillion in 2019, or $75,000 on average among the 245 million adults (aged twenty and above) who live in the United States.

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THE GREAT ESCAPE: TAX EVASION ACROSS BORDERS At the heart of today’s tax dodging lies a powerful and versatile technology: the offshore shell company. Popularized in 2016 by the revelations in the Panama Papers, the offshore shell company is like a multi-tool. It can be used to avoid estate taxes, capital gains taxes, ordinary income taxes, wealth taxes, corporate income taxes, withholding taxes on cross-border payments of interest, dividends, and royalties. It also comes in handy if you want to defraud the IRS, ex-spouses, children, business partners, or creditors. It’s not unhelpful if your goal is to practice insider trading, launder money, pocket illegal commissions, fund an electoral campaign under the table, or finance terrorist groups.

The Unbanking of America: How the New Middle Class Survives by Lisa Servon

Affordable Care Act / Obamacare, Airbnb, basic income, behavioural economics, Build a better mousetrap, business cycle, Cass Sunstein, choice architecture, creative destruction, Credit Default Swap, cross-border payments, do well by doing good, employer provided health coverage, financial exclusion, financial independence, financial innovation, gender pay gap, gentrification, George Akerlof, gig economy, Glass-Steagall Act, income inequality, independent contractor, informal economy, Jane Jacobs, Joseph Schumpeter, late fees, low interest rates, Lyft, M-Pesa, medical bankruptcy, microcredit, Occupy movement, payday loans, peer-to-peer lending, precariat, Ralph Nader, Richard Thaler, Robert Shiller, Ronald Reagan, Savings and loan crisis, sharing economy, subprime mortgage crisis, too big to fail, transaction costs, unbanked and underbanked, underbanked, universal basic income, Unsafe at Any Speed, We are the 99%, white flight, working poor, Zipcar

One application of Ripple technology handles “cross-border payments”—value being moved from one country to another. My RiteCheck and Check Center customers frequently sent money to friends and relatives in their home countries, and in other parts of the United States, and they paid a lot for those transactions. The way we do this now, Larsen says, “is built on old 1970s infrastructure, where you have all the problems of uncertainty, failure rates, time delay, and enormous cost.” Larsen estimates that it costs about $1.6 trillion dollars to move the $22 trillion in cross-border payments that are transferred annually.

The Fourth Industrial Revolution by Klaus Schwab

"World Economic Forum" Davos, 3D printing, additive manufacturing, Airbnb, Amazon Mechanical Turk, Amazon Web Services, Anthropocene, augmented reality, autonomous vehicles, barriers to entry, Baxter: Rethink Robotics, bitcoin, blockchain, Buckminster Fuller, call centre, circular economy, clean water, collaborative consumption, commoditize, conceptual framework, continuous integration, CRISPR, cross-border payments, crowdsourcing, digital divide, digital twin, disintermediation, disruptive innovation, distributed ledger, driverless car, Edward Snowden, Elon Musk, epigenetics, Erik Brynjolfsson, future of work, global value chain, Google Glasses, hype cycle, income inequality, Internet Archive, Internet of things, invention of the steam engine, job automation, job satisfaction, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, life extension, Lyft, Marc Benioff, mass immigration, megacity, meta-analysis, more computing power than Apollo, mutually assured destruction, Narrative Science, Network effects, Nicholas Carr, nuclear taboo, OpenAI, personalized medicine, precariat, precision agriculture, Productivity paradox, race to the bottom, randomized controlled trial, reshoring, RFID, rising living standards, Sam Altman, Second Machine Age, secular stagnation, self-driving car, sharing economy, Silicon Valley, smart cities, smart contracts, social contagion, software as a service, Stephen Hawking, Steve Jobs, Steven Levy, Stuxnet, supercomputer in your pocket, synthetic biology, TaskRabbit, The Future of Employment, The Spirit Level, total factor productivity, transaction costs, Uber and Lyft, uber lyft, Watson beat the top human players on Jeopardy!, Wayback Machine, WikiLeaks, winner-take-all economy, women in the workforce, working-age population, Y Combinator, Zipcar

The industry is also aware that blockchain will soon revolutionize the way it operates because its possible applications in finance have the opportunity to reduce settlement and transaction costs by up to $20 billion and transform the way the industry works. The shared database technology can streamline such varied activities as the storage of clients’ accounts, cross-border payments, and the clearing and settling of trades, as well as products and services that do not exist yet, such as smart futures contracts that self-execute without a trader (e.g. a credit derivative that pays out automatically when a country or company defaults). The healthcare industry is also faced with the challenge of incorporating simultaneous advances in physical, biological and digital technologies, as the development of new diagnostic approaches and therapies coincide with a push to digitize patient records and capitalize on the wealth of information able to be gathered from wearable devices and implantable technologies.

The Long Game: China's Grand Strategy to Displace American Order by Rush Doshi

"World Economic Forum" Davos, American ideology, anti-communist, Asian financial crisis, autonomous vehicles, Black Lives Matter, Bretton Woods, capital controls, coronavirus, COVID-19, crony capitalism, cross-border payments, cryptocurrency, defense in depth, deindustrialization, Deng Xiaoping, deplatforming, disinformation, Dissolution of the Soviet Union, Donald Trump, drone strike, energy security, European colonialism, eurozone crisis, financial innovation, George Floyd, global pandemic, global reserve currency, global supply chain, global value chain, Great Leap Forward, high-speed rail, Internet Archive, Internet of things, Kickstarter, kremlinology, Malacca Straits, middle-income trap, Mikhail Gorbachev, MITM: man-in-the-middle, Monroe Doctrine, Network effects, Nixon triggered the end of the Bretton Woods system, offshore financial centre, positional goods, post-truth, purchasing power parity, RAND corporation, reserve currency, rolodex, Ronald Reagan, South China Sea, special drawing rights, special economic zone, TikTok, trade liberalization, transaction costs, UNCLOS, UNCLOS, undersea cable, zero-sum game

In 2012, the United States and Europe used their influence over the organization to force it to delink Iranian banks from SWIFT networks, which marked the first time in SWIFT’s history that the institution had cut off an entire country from access to the company’s network.79 Iran had relied on SWIFT for two million cross-border payments annually—a volume that could not be replaced by another messaging network—and loss of access made payment for Iranian oil impossible, devastated Iran’s economy, and prevented the government from accessing substantial amounts of its own foreign reserves that it had invested abroad.80 A few years later, in 2017, SWIFT access was denied to North Korean banks.81 SWIFT’s structural power has even been threatened against great powers like Russia after its invasion of Crimea.

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As one payments expert notes, “CIPS is trying to be the middleman between SWIFT and CNAPS,” which would give China’s central bank an ability to determine who has access to China’s financial system.95 This provides a central control point over transactions in renminbi and boosts China’s structural power. For now, CIPS is not a meaningful alternative to the SWIFT system. It may bolster China’s structural power by making it much easier for China to cut off other institutions or countries from China’s financial system, but it is not yet ready to serve as an alternative messaging system for cross-border payments outside of China. Even so, that day will come. Other great powers like Russia are already investing in such systems, and China—which also faces the threat of Western financial sanctions—has ample reason to continue developing CIPS into an alternative that can bypass American structural power over international payments in the coming decade.

Before Babylon, Beyond Bitcoin: From Money That We Understand to Money That Understands Us (Perspectives) by David Birch

"World Economic Forum" Davos, agricultural Revolution, Airbnb, Alan Greenspan, bank run, banks create money, bitcoin, blockchain, Bretton Woods, British Empire, Broken windows theory, Burning Man, business cycle, capital controls, cashless society, Clayton Christensen, clockwork universe, creative destruction, credit crunch, cross-border payments, cross-subsidies, crowdsourcing, cryptocurrency, David Graeber, dematerialisation, Diane Coyle, disruptive innovation, distributed ledger, Dogecoin, double entry bookkeeping, Ethereum, ethereum blockchain, facts on the ground, fake news, fault tolerance, fiat currency, financial exclusion, financial innovation, financial intermediation, floating exchange rates, Fractional reserve banking, index card, informal economy, Internet of things, invention of the printing press, invention of the telegraph, invention of the telephone, invisible hand, Irish bank strikes, Isaac Newton, Jane Jacobs, Kenneth Rogoff, knowledge economy, Kuwabatake Sanjuro: assassination market, land bank, large denomination, low interest rates, M-Pesa, market clearing, market fundamentalism, Marshall McLuhan, Martin Wolf, mobile money, Money creation, money: store of value / unit of account / medium of exchange, new economy, Northern Rock, Pingit, prediction markets, price stability, QR code, quantitative easing, railway mania, Ralph Waldo Emerson, Real Time Gross Settlement, reserve currency, Satoshi Nakamoto, seigniorage, Silicon Valley, smart contracts, social graph, special drawing rights, Suez canal 1869, technoutopianism, The future is already here, the payments system, The Wealth of Nations by Adam Smith, too big to fail, transaction costs, tulip mania, wage slave, Washington Consensus, wikimedia commons

However, at Le Bourget, as The Times puts it, such controls are not ‘strictly’ applied (Bremner 2014). ‘Not strictly applied’ means, here, not applied at all, I imagine, so rich people can fly as much cash as they like in and out of France in their private planes. For those without private planes, the cross-border payments infrastructure is less facilitating. All of which makes me wonder what the point of these rules is. The stringent money-laundering regulations have limited impact on criminal activities. Yet tracking illicit money flows requires considerable bureaucracy and enforcing the regulations costs an estimated $7 billion in the United States, and probably far more (Kenny 2015).

The Great Tax Robbery: How Britain Became a Tax Haven for Fat Cats and Big Business by Richard Brooks

accounting loophole / creative accounting, bank run, Big bang: deregulation of the City of London, bonus culture, Bretton Woods, carried interest, Celtic Tiger, collateralized debt obligation, commoditize, Corn Laws, corporate social responsibility, crony capitalism, cross-border payments, Double Irish / Dutch Sandwich, financial deregulation, financial engineering, haute couture, information security, intangible asset, interest rate swap, Jarndyce and Jarndyce, mega-rich, Northern Rock, offshore financial centre, race to the bottom, shareholder value, short selling, supply-chain management, The Chicago School, The Wealth of Nations by Adam Smith, transfer pricing, two and twenty

But by 2011, just £680m worth of tax covering several years’ business was at stake on this ‘transfer pricing’ question and the related issue of multinationals stripping out profits from British operations in financing costs (see chapter 5).‌24 Since £680m tax equates to less than £3bn worth of cross-border payments – roughly the level of business that one big multinational might have with overseas affiliates in a single year – the evidence that the British tax authorities had surrendered the tax border was clear. The amount of tax recovered from these enquiries from the 770 companies dealt with by HMRC’s Large Business Service dropped to £273m by 2010/11 from a high of £1.6bn two years before.‌25 At the same time, designing financing schemes to funnel interest into tax havens and ‘tax-efficient supply chain management’ – i.e. transfer pricing schemes – for the biggest companies to siphon profits out of the UK into lower tax areas remain among the major accountancy firms most profitable lines of tax work.

The Corruption of Capitalism: Why Rentiers Thrive and Work Does Not Pay by Guy Standing

"World Economic Forum" Davos, 3D printing, Airbnb, Alan Greenspan, Albert Einstein, Amazon Mechanical Turk, anti-fragile, Asian financial crisis, asset-backed security, bank run, banking crisis, basic income, Ben Bernanke: helicopter money, Bernie Sanders, Big bang: deregulation of the City of London, Big Tech, bilateral investment treaty, Bonfire of the Vanities, Boris Johnson, Bretton Woods, business cycle, Capital in the Twenty-First Century by Thomas Piketty, carried interest, cashless society, central bank independence, centre right, Clayton Christensen, collapse of Lehman Brothers, collective bargaining, commons-based peer production, credit crunch, crony capitalism, cross-border payments, crowdsourcing, debt deflation, declining real wages, deindustrialization, disruptive innovation, Doha Development Round, Donald Trump, Double Irish / Dutch Sandwich, ending welfare as we know it, eurozone crisis, Evgeny Morozov, falling living standards, financial deregulation, financial innovation, Firefox, first-past-the-post, future of work, Garrett Hardin, gentrification, gig economy, Goldman Sachs: Vampire Squid, Greenspan put, Growth in a Time of Debt, housing crisis, income inequality, independent contractor, information retrieval, intangible asset, invention of the steam engine, investor state dispute settlement, it's over 9,000, James Watt: steam engine, Jeremy Corbyn, job automation, John Maynard Keynes: technological unemployment, labour market flexibility, light touch regulation, Long Term Capital Management, low interest rates, lump of labour, Lyft, manufacturing employment, Mark Zuckerberg, market clearing, Martin Wolf, means of production, megaproject, mini-job, Money creation, Mont Pelerin Society, moral hazard, mortgage debt, mortgage tax deduction, Neil Kinnock, non-tariff barriers, North Sea oil, Northern Rock, nudge unit, Occupy movement, offshore financial centre, oil shale / tar sands, open economy, openstreetmap, patent troll, payday loans, peer-to-peer lending, Phillips curve, plutocrats, Ponzi scheme, precariat, quantitative easing, remote working, rent control, rent-seeking, ride hailing / ride sharing, Right to Buy, Robert Gordon, Ronald Coase, Ronald Reagan, Sam Altman, savings glut, Second Machine Age, secular stagnation, sharing economy, Silicon Valley, Silicon Valley startup, Simon Kuznets, SoftBank, sovereign wealth fund, Stephen Hawking, Steve Ballmer, structural adjustment programs, TaskRabbit, The Chicago School, The Future of Employment, the payments system, The Rise and Fall of American Growth, Thomas Malthus, Thorstein Veblen, too big to fail, Tragedy of the Commons, Travis Kalanick, Uber and Lyft, Uber for X, uber lyft, Y Combinator, zero-sum game, Zipcar

Copyright rules for music, paintings, sculpture, photographs, videos, films, TV programmes, computer programs and databases have also been strengthened. For sound recordings, the term of protection has risen to seventy years from date of release in the EU and to ninety-five years in the USA, which grants the same term to films made by US movie studios. In 2014, cross-border payments of royalties and licensing fees for use of all forms of intellectual property (excluding profits from domestic exploitation) were estimated by the WTO at nearly $300 billion, over three times the figure in 2000 and ten times the amount in 1990. These figures do not include trade in audio-visual services – films, music, videos, TV programmes – worth $19 billion in 2013.

Currency Wars: The Making of the Next Gobal Crisis by James Rickards

"World Economic Forum" Davos, Alan Greenspan, Asian financial crisis, bank run, Bear Stearns, behavioural economics, Benoit Mandelbrot, Berlin Wall, Big bang: deregulation of the City of London, Black Swan, borderless world, Bretton Woods, BRICs, British Empire, business climate, buy and hold, capital controls, Carmen Reinhart, Cass Sunstein, collateralized debt obligation, complexity theory, corporate governance, Credit Default Swap, credit default swaps / collateralized debt obligations, cross-border payments, currency manipulation / currency intervention, currency peg, currency risk, Daniel Kahneman / Amos Tversky, deal flow, Deng Xiaoping, diversification, diversified portfolio, Dr. Strangelove, Fall of the Berlin Wall, family office, financial innovation, floating exchange rates, full employment, game design, German hyperinflation, Gini coefficient, global rebalancing, global reserve currency, Great Leap Forward, guns versus butter model, high net worth, income inequality, interest rate derivative, it's over 9,000, John Meriwether, Kenneth Rogoff, laissez-faire capitalism, liquidity trap, Long Term Capital Management, low interest rates, mandelbrot fractal, margin call, market bubble, Mexican peso crisis / tequila crisis, Money creation, money market fund, money: store of value / unit of account / medium of exchange, Myron Scholes, Network effects, New Journalism, Nixon shock, Nixon triggered the end of the Bretton Woods system, offshore financial centre, oil shock, one-China policy, open economy, paradox of thrift, Paul Samuelson, power law, price mechanism, price stability, private sector deleveraging, proprietary trading, quantitative easing, race to the bottom, RAND corporation, rent-seeking, reserve currency, Ronald Reagan, short squeeze, sovereign wealth fund, special drawing rights, special economic zone, subprime mortgage crisis, The Myth of the Rational Market, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thomas Kuhn: the structure of scientific revolutions, time value of money, too big to fail, value at risk, vertical integration, War on Poverty, Washington Consensus, zero-sum game

From the end of World War II to the end of the Cold War, the world had been divided not only by the Iron Curtain separating the communist and capitalist spheres but also by restrictions imposed by capitalist countries themselves. These restrictions included capital controls that made it difficult to invest freely across borders and taxes that were imposed on cross-border payments made on investments. Stock markets limited membership to local firms and most banks were off-limits to foreign ownership. Courts and politicians tilted the playing field in favor of local favorites, and enforcement of intellectual property rights was spotty at best. The world was highly fragmented, discriminatory and costly for firms with international ambitions.

The Truth Machine: The Blockchain and the Future of Everything by Paul Vigna, Michael J. Casey

3D printing, additive manufacturing, Airbnb, altcoin, Amazon Web Services, barriers to entry, basic income, Berlin Wall, Bernie Madoff, Big Tech, bitcoin, blockchain, blood diamond, Blythe Masters, business process, buy and hold, carbon credits, carbon footprint, cashless society, circular economy, cloud computing, computer age, computerized trading, conceptual framework, content marketing, Credit Default Swap, cross-border payments, crowdsourcing, cryptocurrency, cyber-physical system, decentralized internet, dematerialisation, disinformation, disintermediation, distributed ledger, Donald Trump, double entry bookkeeping, Dunbar number, Edward Snowden, Elon Musk, Ethereum, ethereum blockchain, failed state, fake news, fault tolerance, fiat currency, financial engineering, financial innovation, financial intermediation, Garrett Hardin, global supply chain, Hernando de Soto, hive mind, informal economy, information security, initial coin offering, intangible asset, Internet of things, Joi Ito, Kickstarter, linked data, litecoin, longitudinal study, Lyft, M-Pesa, Marc Andreessen, market clearing, mobile money, money: store of value / unit of account / medium of exchange, Network effects, off grid, pets.com, post-truth, prediction markets, pre–internet, price mechanism, profit maximization, profit motive, Project Xanadu, ransomware, rent-seeking, RFID, ride hailing / ride sharing, Ross Ulbricht, Satoshi Nakamoto, self-driving car, sharing economy, Silicon Valley, smart contracts, smart meter, Snapchat, social web, software is eating the world, supply-chain management, Ted Nelson, the market place, too big to fail, trade route, Tragedy of the Commons, transaction costs, Travis Kalanick, Turing complete, Uber and Lyft, uber lyft, unbanked and underbanked, underbanked, universal basic income, Vitalik Buterin, web of trust, work culture , zero-sum game

With smart hedging strategies that take advantage of blockchain technology’s transparency and low transaction costs, they’ve figured out how to minimize their own risk in briefly holding bitcoin, which lets them pass on affordable rates to their customers, who only deal in their local currencies. The approach is paying dividends, as evident in the recent success of BitPesa, which was established in 2013 and was profiled in The Age of Cryptocurrency. The company, which offers cross-border payments and foreign-exchange transactions in and out of Kenya, Nigeria, Tanzania, and Uganda, reported 25 percent month-on-month growth, taking its transaction volume to $10 million midway through 2017, up from $1 million in 2016. Separately, there were reports that 20 percent of the remittances that Filipino immigrants in South Korea send back home were handled in bitcoin.

The Big Nine: How the Tech Titans and Their Thinking Machines Could Warp Humanity by Amy Webb

"Friedman doctrine" OR "shareholder theory", Ada Lovelace, AI winter, air gap, Airbnb, airport security, Alan Turing: On Computable Numbers, with an Application to the Entscheidungsproblem, algorithmic bias, AlphaGo, Andy Rubin, artificial general intelligence, Asilomar, autonomous vehicles, backpropagation, Bayesian statistics, behavioural economics, Bernie Sanders, Big Tech, bioinformatics, Black Lives Matter, blockchain, Bretton Woods, business intelligence, Cambridge Analytica, Cass Sunstein, Charles Babbage, Claude Shannon: information theory, cloud computing, cognitive bias, complexity theory, computer vision, Computing Machinery and Intelligence, CRISPR, cross-border payments, crowdsourcing, cryptocurrency, Daniel Kahneman / Amos Tversky, data science, deep learning, DeepMind, Demis Hassabis, Deng Xiaoping, disinformation, distributed ledger, don't be evil, Donald Trump, Elon Musk, fail fast, fake news, Filter Bubble, Flynn Effect, Geoffrey Hinton, gig economy, Google Glasses, Grace Hopper, Gödel, Escher, Bach, Herman Kahn, high-speed rail, Inbox Zero, Internet of things, Jacques de Vaucanson, Jeff Bezos, Joan Didion, job automation, John von Neumann, knowledge worker, Lyft, machine translation, Mark Zuckerberg, Menlo Park, move fast and break things, Mustafa Suleyman, natural language processing, New Urbanism, Nick Bostrom, one-China policy, optical character recognition, packet switching, paperclip maximiser, pattern recognition, personalized medicine, RAND corporation, Ray Kurzweil, Recombinant DNA, ride hailing / ride sharing, Rodney Brooks, Rubik’s Cube, Salesforce, Sand Hill Road, Second Machine Age, self-driving car, seminal paper, SETI@home, side project, Silicon Valley, Silicon Valley startup, skunkworks, Skype, smart cities, South China Sea, sovereign wealth fund, speech recognition, Stephen Hawking, strong AI, superintelligent machines, surveillance capitalism, technological singularity, The Coming Technological Singularity, the long tail, theory of mind, Tim Cook: Apple, trade route, Turing machine, Turing test, uber lyft, Von Neumann architecture, Watson beat the top human players on Jeopardy!, zero day

The BAT repeatedly skirts bureaucratic rules. All those earlier scandals—when China’s State Administration of Foreign Exchange fined Alipay 600,000 yuan (about $88,000) for misrepresenting international payments from 2014 to 2016, and Tenpay was punished for failing to file proper registration paperwork for cross-border payments between 2015 and 2017—turned out not to be anomalies.4 It becomes apparent that these aren’t isolated incidents as Chinese state officials experience the tension between socialist sensibilities and the realities of capitalism. Already we are seeing the downstream implications of all these political, strategic, and technical vulnerabilities.

Easy Money: Cryptocurrency, Casino Capitalism, and the Golden Age of Fraud by Ben McKenzie, Jacob Silverman

algorithmic trading, asset allocation, bank run, barriers to entry, Ben McKenzie, Bernie Madoff, Big Tech, bitcoin, Bitcoin "FTX", blockchain, capital controls, citizen journalism, cognitive dissonance, collateralized debt obligation, COVID-19, Credit Default Swap, credit default swaps / collateralized debt obligations, cross-border payments, cryptocurrency, data science, distributed ledger, Dogecoin, Donald Trump, effective altruism, Elon Musk, en.wikipedia.org, Ethereum, ethereum blockchain, experimental economics, financial deregulation, financial engineering, financial innovation, Flash crash, Glass-Steagall Act, high net worth, housing crisis, information asymmetry, initial coin offering, Jacob Silverman, Jane Street, low interest rates, Lyft, margin call, meme stock, money market fund, money: store of value / unit of account / medium of exchange, Network effects, offshore financial centre, operational security, payday loans, Peter Thiel, Ponzi scheme, Potemkin village, prediction markets, proprietary trading, pushing on a string, QR code, quantitative easing, race to the bottom, ransomware, regulatory arbitrage, reserve currency, risk tolerance, Robert Shiller, Robinhood: mobile stock trading app, Ross Ulbricht, Sam Bankman-Fried, Satoshi Nakamoto, Saturday Night Live, short selling, short squeeze, Silicon Valley, Skype, smart contracts, Steve Bannon, systems thinking, TikTok, too big to fail, transaction costs, tulip mania, uber lyft, underbanked, vertical integration, zero-sum game

In June 2021, he announced that El Salvador would begin accepting Bitcoin as legal tender in September. It wasn’t long to prepare. While the actual plan was closely held, the marketing pitch was simple and potentially compelling: If Bitcoin could be used as money—at least when it came to making cross border payments and encouraging tourism—it could be a game changer for the country. El Salvador’s economy depends on remittances. The money that the two to three million people of Salvadoran descent living in the United States send home to their families and loved ones accounts for one-quarter of El Salvador’s GDP.

Stigum's Money Market, 4E by Marcia Stigum, Anthony Crescenzi

accounting loophole / creative accounting, Alan Greenspan, Asian financial crisis, asset allocation, asset-backed security, bank run, banking crisis, banks create money, Bear Stearns, Black-Scholes formula, book value, Brownian motion, business climate, buy and hold, capital controls, central bank independence, centralized clearinghouse, corporate governance, credit crunch, Credit Default Swap, cross-border payments, currency manipulation / currency intervention, currency risk, David Ricardo: comparative advantage, disintermediation, distributed generation, diversification, diversified portfolio, Dutch auction, financial innovation, financial intermediation, fixed income, flag carrier, foreign exchange controls, full employment, Glass-Steagall Act, Goodhart's law, Greenspan put, guns versus butter model, high net worth, implied volatility, income per capita, intangible asset, interest rate derivative, interest rate swap, inverted yield curve, junk bonds, land bank, large denomination, locking in a profit, London Interbank Offered Rate, low interest rates, margin call, market bubble, market clearing, market fundamentalism, Money creation, money market fund, mortgage debt, Myron Scholes, offshore financial centre, paper trading, pension reform, Phillips curve, Ponzi scheme, price mechanism, price stability, profit motive, proprietary trading, prudent man rule, Real Time Gross Settlement, reserve currency, risk free rate, risk tolerance, risk/return, Savings and loan crisis, seigniorage, shareholder value, short selling, short squeeze, tail risk, technology bubble, the payments system, too big to fail, transaction costs, two-sided market, value at risk, volatility smile, yield curve, zero-coupon bond, zero-sum game

Foreign banks, that—after they get their CHIPS position—do a lot of volume to work off that position, can cause variability late in the day in a clearing bank’s position. Sometimes on a settlement Wednesday, this will create real problems for such a bank. The CHIPS numbers are particularly important to banks dealing abroad because 95% of all U.S. dollar cross-border payments are settled through CHIPS. Settlement Wednesday is an important day on a fed funds desk, but is no longer filled with the types of uncertainties that once sparked much greater volatility in past years. The Federal Reserve took a number of actions during the 1990s to limit such volatility.

…

There is also the convenience factor. A foreign bank branch in Los Angeles that’s doing a trade with a regional American in Philadelphia or a Japanese bank in Seattle might rather pay and receive funds via its local district Federal Reserve Bank than via a New York bank. In early 2006, roughly 95% of all U.S. dollar cross-border payments were settled through CHIPS, which was clearing $1.4 trillion in payments on a daily basis (see below and Chapter 12 for a further discussion on CHIPS). In the early 1980s, clearinghouse funds differed from fed funds in that they turned into immediately available funds, that is, fed funds, only on the day after the delivery or value date.

…

Malz (1998) identified a number of reasons why FRA and swap rates contain information on the so-called term structure of interest rates superior to that for government bonds. • Eurodollar transactions that take place in London settle mostly through CHIPS; transactions that take place in New York settle mostly through Fedwire. In early 2006, roughly 95% of all U.S. dollar cross-border payments were settled through CHIPS. • Some tiering of Eurodollar rates exists. This was apparent particularly in 1998 when investors assigned greater risk to holding Eurodollars in Japanese banks. • Some trading in Eurocurrency deposits is generated by swaps, which are extensively used by banks to match assets and liabilities in their Eurobooks

American Kleptocracy: How the U.S. Created the World's Greatest Money Laundering Scheme in History by Casey Michel

"RICO laws" OR "Racketeer Influenced and Corrupt Organizations", Bellingcat, Berlin Wall, Bernie Sanders, bitcoin, clean water, coronavirus, corporate governance, cross-border payments, cryptocurrency, deindustrialization, Donald Trump, en.wikipedia.org, estate planning, Fall of the Berlin Wall, fixed income, forensic accounting, Global Witness, high net worth, hiring and firing, income inequality, Internet Archive, invention of the telegraph, Jeffrey Epstein, joint-stock company, Kickstarter, Maui Hawaii, McMansion, megaproject, Mikhail Gorbachev, New Journalism, offshore financial centre, opioid epidemic / opioid crisis, Ponzi scheme, race to the bottom, Ronald Reagan, Silicon Valley, Silicon Valley startup, Steve Jobs, too big to fail

Given that many of these requirements for transparency are already on the books, applying such transparency is far from the uphill battle it may seem. Nor is that preexisting language in things like the Patriot Act the only card the U.S. government can quickly play. In 2004, in a little-noticed measure at the height of the Iraq War, Congress granted the Treasury Department the right to create a cross-border payments database. For all the reasons detailed above—internal lethargy, lack of resources, industry-wide pushback—the database never came into existence. But that doesn’t mean it can’t yet be realized. As Joshua Kirschenbaum and David Murray wrote for the German Marshall Fund, “U.S. banks process trillions of dollars in payments per day, including about half of cross-border funds transfers worldwide.”25 A database highlighting and detailing these payments, which we already have in places like Canada and Australia, would not only help reduce regulatory burdens on banks but would also stymie kleptocrats trying to bounce their funds in and out of American jurisdictions.

The Future Is Asian by Parag Khanna

3D printing, Admiral Zheng, affirmative action, Airbnb, Amazon Web Services, anti-communist, Asian financial crisis, asset-backed security, augmented reality, autonomous vehicles, Ayatollah Khomeini, barriers to entry, Basel III, bike sharing, birth tourism , blockchain, Boycotts of Israel, Branko Milanovic, British Empire, call centre, capital controls, carbon footprint, cashless society, clean tech, clean water, cloud computing, colonial rule, commodity super cycle, computer vision, connected car, corporate governance, CRISPR, crony capitalism, cross-border payments, currency peg, death from overwork, deindustrialization, Deng Xiaoping, Didi Chuxing, Dissolution of the Soviet Union, Donald Trump, driverless car, dual-use technology, energy security, European colonialism, factory automation, failed state, fake news, falling living standards, family office, financial engineering, fixed income, flex fuel, gig economy, global reserve currency, global supply chain, Great Leap Forward, green transition, haute couture, haute cuisine, illegal immigration, impact investing, income inequality, industrial robot, informal economy, initial coin offering, Internet of things, karōshi / gwarosa / guolaosi, Kevin Kelly, Kickstarter, knowledge worker, light touch regulation, low cost airline, low skilled workers, Lyft, machine translation, Malacca Straits, Marc Benioff, Mark Zuckerberg, Masayoshi Son, megacity, megaproject, middle-income trap, Mikhail Gorbachev, money market fund, Monroe Doctrine, mortgage debt, natural language processing, Netflix Prize, new economy, off grid, oil shale / tar sands, open economy, Parag Khanna, payday loans, Pearl River Delta, prediction markets, purchasing power parity, race to the bottom, RAND corporation, rent-seeking, reserve currency, ride hailing / ride sharing, Ronald Reagan, Salesforce, Scramble for Africa, self-driving car, Shenzhen special economic zone , Silicon Valley, smart cities, SoftBank, South China Sea, sovereign wealth fund, special economic zone, stem cell, Steve Jobs, Steven Pinker, supply-chain management, sustainable-tourism, synthetic biology, systems thinking, tech billionaire, tech worker, trade liberalization, trade route, transaction costs, Travis Kalanick, uber lyft, upwardly mobile, urban planning, Vision Fund, warehouse robotics, Washington Consensus, working-age population, Yom Kippur War

Given the rapid advance of these blockchain instruments, it is more likely that all Asian countries will use them to denominate trade with each other than that they will all change to using the renminbi. Whatever the currency, central banks such as those of Singapore, Australia, and New Zealand have established financial technology (“fintech”) bridges to enable seamless cross-border payments with others quickly getting on board. In Asia, money knows very few borders. Capitalism, Asian Style Asian countries have no doubt that globalization has been their ticket to prosperity. Even as they become less dependent on Western economies, they are pursuing an “open regionalism” of integrating with one another while expanding trade ties far and wide.

The Age of Cryptocurrency: How Bitcoin and Digital Money Are Challenging the Global Economic Order by Paul Vigna, Michael J. Casey

Airbnb, Alan Greenspan, altcoin, Apple Newton, bank run, banking crisis, bitcoin, Bitcoin Ponzi scheme, blockchain, Bretton Woods, buy and hold, California gold rush, capital controls, carbon footprint, clean water, Cody Wilson, collaborative economy, collapse of Lehman Brothers, Columbine, Credit Default Swap, cross-border payments, cryptocurrency, David Graeber, decentralized internet, disinformation, disintermediation, Dogecoin, driverless car, Edward Snowden, Elon Musk, Ethereum, ethereum blockchain, fiat currency, financial engineering, financial innovation, Firefox, Flash crash, Ford Model T, Fractional reserve banking, Glass-Steagall Act, hacker house, Hacker News, Hernando de Soto, high net worth, informal economy, intangible asset, Internet of things, inventory management, Joi Ito, Julian Assange, Kickstarter, Kuwabatake Sanjuro: assassination market, litecoin, Long Term Capital Management, Lyft, M-Pesa, Marc Andreessen, Mark Zuckerberg, McMansion, means of production, Menlo Park, mobile money, Money creation, money: store of value / unit of account / medium of exchange, Nelson Mandela, Network effects, new economy, new new economy, Nixon shock, Nixon triggered the end of the Bretton Woods system, off-the-grid, offshore financial centre, payday loans, Pearl River Delta, peer-to-peer, peer-to-peer lending, pets.com, Ponzi scheme, prediction markets, price stability, printed gun, profit motive, QR code, RAND corporation, regulatory arbitrage, rent-seeking, reserve currency, Robert Shiller, Ross Ulbricht, Satoshi Nakamoto, seigniorage, shareholder value, sharing economy, short selling, Silicon Valley, Silicon Valley startup, Skype, smart contracts, special drawing rights, Spread Networks laid a new fibre optics cable between New York and Chicago, Steve Jobs, supply-chain management, Ted Nelson, The Great Moderation, the market place, the payments system, The Wealth of Nations by Adam Smith, too big to fail, transaction costs, tulip mania, Turing complete, Tyler Cowen, Tyler Cowen: Great Stagnation, Uber and Lyft, uber lyft, underbanked, Vitalik Buterin, WikiLeaks, Y Combinator, Y2K, zero-sum game, Zimmermann PGP

Not for nothing, Ripple is aggressively marketing to these smaller banks. David Andolfatto, the chief economist at the Federal Reserve Bank of St. Louis, has sung Ripple’s praises for cutting waste in the financial system. By mid-2014, the concept was just starting to resonate with a few early adopters. U.K.-based AstroPay, which claimed to manage the largest cross-border payments network in Latin America, signed on as a gateway for its six hundred thousand business clients in the region, and Fidor Bank of Germany, already a pioneer in providing services to bitcoin businesses, said it planned to use Ripple to offer supercheap international transfers, as did CBW Bank and Cross River Bank in the United States.

More: The 10,000-Year Rise of the World Economy by Philip Coggan

accounting loophole / creative accounting, Ada Lovelace, agricultural Revolution, Airbnb, airline deregulation, Alan Greenspan, Andrei Shleifer, anti-communist, Apollo 11, assortative mating, autonomous vehicles, bank run, banking crisis, banks create money, basic income, Bear Stearns, Berlin Wall, Black Monday: stock market crash in 1987, Bletchley Park, Bob Noyce, Boeing 747, bond market vigilante , Branko Milanovic, Bretton Woods, Brexit referendum, British Empire, business cycle, call centre, capital controls, carbon footprint, carbon tax, Carl Icahn, Carmen Reinhart, Celtic Tiger, central bank independence, Charles Babbage, Charles Lindbergh, clean water, collective bargaining, Columbian Exchange, Columbine, Corn Laws, cotton gin, credit crunch, Credit Default Swap, crony capitalism, cross-border payments, currency peg, currency risk, debt deflation, DeepMind, Deng Xiaoping, discovery of the americas, Donald Trump, driverless car, Easter island, Erik Brynjolfsson, European colonialism, eurozone crisis, Fairchild Semiconductor, falling living standards, financial engineering, financial innovation, financial intermediation, floating exchange rates, flying shuttle, Ford Model T, Fractional reserve banking, Frederick Winslow Taylor, full employment, general purpose technology, germ theory of disease, German hyperinflation, gig economy, Gini coefficient, Glass-Steagall Act, global supply chain, global value chain, Gordon Gekko, Great Leap Forward, greed is good, Greenspan put, guns versus butter model, Haber-Bosch Process, Hans Rosling, Hernando de Soto, hydraulic fracturing, hydroponic farming, Ignaz Semmelweis: hand washing, income inequality, income per capita, independent contractor, indoor plumbing, industrial robot, inflation targeting, Isaac Newton, James Watt: steam engine, job automation, John Snow's cholera map, joint-stock company, joint-stock limited liability company, Jon Ronson, Kenneth Arrow, Kula ring, labour market flexibility, land reform, land tenure, Lao Tzu, large denomination, Les Trente Glorieuses, liquidity trap, Long Term Capital Management, Louis Blériot, low cost airline, low interest rates, low skilled workers, lump of labour, M-Pesa, Malcom McLean invented shipping containers, manufacturing employment, Marc Andreessen, Mark Zuckerberg, Martin Wolf, McJob, means of production, Mikhail Gorbachev, mittelstand, Modern Monetary Theory, moral hazard, Murano, Venice glass, Myron Scholes, Nelson Mandela, Network effects, Northern Rock, oil shale / tar sands, oil shock, Paul Samuelson, Paul Volcker talking about ATMs, Phillips curve, popular capitalism, popular electronics, price stability, principal–agent problem, profit maximization, purchasing power parity, quantitative easing, railway mania, Ralph Nader, regulatory arbitrage, road to serfdom, Robert Gordon, Robert Shiller, Robert Solow, Ronald Coase, Ronald Reagan, savings glut, scientific management, Scramble for Africa, Second Machine Age, secular stagnation, Silicon Valley, Simon Kuznets, South China Sea, South Sea Bubble, special drawing rights, spice trade, spinning jenny, Steven Pinker, Suez canal 1869, TaskRabbit, techlash, Thales and the olive presses, Thales of Miletus, The Great Moderation, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, The Rise and Fall of American Growth, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thomas Malthus, Thorstein Veblen, trade route, Tragedy of the Commons, transaction costs, transatlantic slave trade, transcontinental railway, Triangle Shirtwaist Factory, universal basic income, Unsafe at Any Speed, Upton Sinclair, V2 rocket, Veblen good, War on Poverty, Washington Consensus, Watson beat the top human players on Jeopardy!, women in the workforce, world market for maybe five computers, Yom Kippur War, you are the product, zero-sum game

Merchants would have agents in cities with which they traded; this would allow credit to be granted, via the use of bills of exchange, a written order instructing the recipient to make a payment. A hawala, or order to pay, was very similar to a modern cheque. In the upper left corner was the amount to be paid; in the lower left corner of the order was the date and the name of the payer.18 The hawala system is still widely used in the Islamic world as a system of cross-border payment. Trust was vital to this system as traders believed that their fellow Muslims would not break their word.19 Buying and selling on credit was widespread. While interest was avoided, bankers charged fees for lending money, for changing money, and for issuing bills of exchange.20 The goods traded were the typical high-value items of the day.

The Euro and the Battle of Ideas by Markus K. Brunnermeier, Harold James, Jean-Pierre Landau

"there is no alternative" (TINA), Affordable Care Act / Obamacare, Alan Greenspan, asset-backed security, bank run, banking crisis, battle of ideas, Bear Stearns, Ben Bernanke: helicopter money, Berlin Wall, Bretton Woods, Brexit referendum, business cycle, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Celtic Tiger, central bank independence, centre right, collapse of Lehman Brothers, collective bargaining, credit crunch, Credit Default Swap, cross-border payments, currency peg, currency risk, debt deflation, Deng Xiaoping, different worldview, diversification, Donald Trump, Edward Snowden, en.wikipedia.org, Fall of the Berlin Wall, financial deregulation, financial repression, fixed income, Flash crash, floating exchange rates, full employment, Future Shock, German hyperinflation, global reserve currency, income inequality, inflation targeting, information asymmetry, Irish property bubble, Jean Tirole, Kenneth Rogoff, Les Trente Glorieuses, low interest rates, Martin Wolf, mittelstand, Money creation, money market fund, Mont Pelerin Society, moral hazard, negative equity, Neil Kinnock, new economy, Northern Rock, obamacare, offshore financial centre, open economy, paradox of thrift, pension reform, Phillips curve, Post-Keynesian economics, price stability, principal–agent problem, quantitative easing, race to the bottom, random walk, regulatory arbitrage, rent-seeking, reserve currency, risk free rate, road to serfdom, secular stagnation, short selling, Silicon Valley, South China Sea, special drawing rights, tail risk, the payments system, too big to fail, Tyler Cowen, union organizing, unorthodox policies, Washington Consensus, WikiLeaks, yield curve

It is composed, however, of many elements, and its architecture can be best described as a network where different entities—the ECB and the NCBs—constantly interact according to predetermined processes and rules. The financial relationship between the ECB and national central banks is the backbone and the lifeblood of the euro. Cross-border payments between countries are ultimately settled between central banks under the TARGET2 multilateral payments system (in 2007 TARGET2 replaced the similar TARGET system). Prior to the crisis, large sums of cross-border capital flows were channeled through the interbank market. Many banks in the periphery of Europe, such as Spain, refinanced the loans they granted short term in the interbank market, for example from a German bank.

Manias, Panics and Crashes: A History of Financial Crises, Sixth Edition by Kindleberger, Charles P., Robert Z., Aliber

active measures, Alan Greenspan, Asian financial crisis, asset-backed security, bank run, banking crisis, Basel III, Bear Stearns, Bernie Madoff, Black Monday: stock market crash in 1987, Black Swan, Boeing 747, Bonfire of the Vanities, break the buck, Bretton Woods, British Empire, business cycle, buy and hold, Carmen Reinhart, central bank independence, cognitive dissonance, collapse of Lehman Brothers, collateralized debt obligation, Corn Laws, corporate governance, corporate raider, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, cross-border payments, currency peg, currency risk, death of newspapers, debt deflation, Deng Xiaoping, disintermediation, diversification, diversified portfolio, edge city, financial deregulation, financial innovation, Financial Instability Hypothesis, financial repression, fixed income, floating exchange rates, George Akerlof, German hyperinflation, Glass-Steagall Act, Herman Kahn, Honoré de Balzac, Hyman Minsky, index fund, inflation targeting, information asymmetry, invisible hand, Isaac Newton, Japanese asset price bubble, joint-stock company, junk bonds, large denomination, law of one price, liquidity trap, London Interbank Offered Rate, Long Term Capital Management, low interest rates, margin call, market bubble, Mary Meeker, Michael Milken, money market fund, money: store of value / unit of account / medium of exchange, moral hazard, new economy, Nick Leeson, Northern Rock, offshore financial centre, Ponzi scheme, price stability, railway mania, Richard Thaler, riskless arbitrage, Robert Shiller, short selling, Silicon Valley, South Sea Bubble, special drawing rights, Suez canal 1869, telemarketer, The Chicago School, the market place, The Myth of the Rational Market, The Wealth of Nations by Adam Smith, too big to fail, transaction costs, tulip mania, very high income, Washington Consensus, Y2K, Yogi Berra, Yom Kippur War

Previously the United States bought silver from Mexico which was then shipped to China to finance the US trade deficit; then the silver was shipped to Britain to finance China’s trade deficit. The institutional innovation was that American merchants sent bills of exchange that specified payment in the British pound for China’s imports; the Chinese then shipped these bills to Britain to finance their trade deficit. The transactions costs involved in making cross-border payments using bills of exchange were much smaller than those that involved the shipment of silver. The result of this innovation was that the silver stayed in the United States so that the US money supply did not decline.2 The global boom of the 1850s followed from the combination of new gold discoveries, the formation of new banks in Britain, France, Germany, and the United States, the establishment of clearing-houses by the banks in New York and in Philadelphia and the expansion of the London clearing-house.

Principles of Corporate Finance by Richard A. Brealey, Stewart C. Myers, Franklin Allen

3Com Palm IPO, accelerated depreciation, accounting loophole / creative accounting, Airbus A320, Alan Greenspan, AOL-Time Warner, Asian financial crisis, asset allocation, asset-backed security, banking crisis, Bear Stearns, Bernie Madoff, big-box store, Black Monday: stock market crash in 1987, Black-Scholes formula, Boeing 747, book value, break the buck, Brownian motion, business cycle, buy and hold, buy low sell high, California energy crisis, capital asset pricing model, capital controls, Carl Icahn, Carmen Reinhart, carried interest, collateralized debt obligation, compound rate of return, computerized trading, conceptual framework, corporate governance, correlation coefficient, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, cross-border payments, cross-subsidies, currency risk, discounted cash flows, disintermediation, diversified portfolio, Dutch auction, equity premium, equity risk premium, eurozone crisis, fear index, financial engineering, financial innovation, financial intermediation, fixed income, frictionless, fudge factor, German hyperinflation, implied volatility, index fund, information asymmetry, intangible asset, interest rate swap, inventory management, Iridium satellite, James Webb Space Telescope, junk bonds, Kenneth Rogoff, Larry Ellison, law of one price, linear programming, Livingstone, I presume, London Interbank Offered Rate, Long Term Capital Management, loss aversion, Louis Bachelier, low interest rates, market bubble, market friction, money market fund, moral hazard, Myron Scholes, new economy, Nick Leeson, Northern Rock, offshore financial centre, PalmPilot, Ponzi scheme, prediction markets, price discrimination, principal–agent problem, profit maximization, purchasing power parity, QR code, quantitative trading / quantitative finance, random walk, Real Time Gross Settlement, risk free rate, risk tolerance, risk/return, Robert Shiller, Scaled Composites, shareholder value, Sharpe ratio, short selling, short squeeze, Silicon Valley, Skype, SpaceShipOne, Steve Jobs, subprime mortgage crisis, sunk-cost fallacy, systematic bias, Tax Reform Act of 1986, The Nature of the Firm, the payments system, the rule of 72, time value of money, too big to fail, transaction costs, University of East Anglia, urban renewal, VA Linux, value at risk, Vanguard fund, vertical integration, yield curve, zero-coupon bond, zero-sum game, Zipcar

Fedwire is operated by the Federal Reserve system, and connects nearly 9,000 financial institutions to the Fed and thereby to each other.15 CHIPS is a bank-owned system serving more than 1,400 U.S. financial institutions and hundreds of international participants. It mainly handles eurodollar payments and foreign exchange transactions, and is used for over 95% of cross-border payments in dollars. Table 30.5 shows that the number of payments by Fedwire and CHIPS is relatively small, but the sums involved are huge. Speeding Up Check Collections Although checks are rarely used for large-value payments, they continue to be the most common method of payment for smaller nonrecurring transactions.