Think globally, settle locally? Multilateral platforms for cross-border payments based on distributed ledger technology

Abstract

Cross-border payments, especially between different currency areas, are still more expensive, slower and less transparent than domestic transactions. In addition to attempts to facilitate interoperability by harmonising message standards or legal frameworks, there is also the vision of using multilateral platforms to reduce existing inefficiencies. A particular focus here is on distributed ledger technology (DLT), which could create additional benefits beyond payment transactions, for example by facilitating broader economic activity by means of tokenised assets. Some private sector players, as well as international organisations such as the International Monetary Fund and the Bank for International Settlements, have already developed concepts for DLT-based multilateral platforms. However, their realisation faces broader policy challenges that are unlikely to be solved per se with the help of new technologies. Although a global multilateral platform does indeed harbour great potential for efficiency gains, regional solutions are more likely to emerge that could be linked together to achieve efficiency gains at a global level.