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This Note explores the design and governance of platforms to enhance cross-border payments in line with public policy goals. While much innovation in recent years has more narrowly targeted end-user frictions, the vision in this paper is based on the mandate of the IMF, governed by the central banks and finance ministries of 190 member countries. Cross-border payments present the foundation for the global financial system, and its functioning is overseen by the IMF.

Economics: General --- Macroeconomics --- Banks and Banking --- Industries: Financial Services --- Information Management --- Foreign Exchange --- Criminology --- Transactional Relationships --- Contracts and Reputation --- Networks --- Monetary Systems --- Standards --- Regimes --- Government and the Monetary System --- Payment Systems --- Monetary Policy --- IT Management --- Illegal Behavior and the Enforcement of Law --- Economics of specific sectors --- Economic & financial crises & disasters --- Banking --- Distributed ledgers --- Knowledge management --- Currency --- Foreign exchange --- Corporate crime --- white-collar crime --- Economic sectors --- Financial crises --- International reserves --- Central banks --- Central Bank digital currencies --- Technology --- Information and data management --- Anti-money laundering and combating the financing of terrorism (AML/CFT) --- Crime --- Informal sector --- Economics --- Currency crises --- Foreign exchange reserves --- Financial services industry --- Technological innovations --- Information resources management --- Money laundering --- It Management --- White-collar crime

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Usando datos a nivel de empresa correspondientes a aproximadamente 1.000 bancos e instituciones financieras no bancarias en 22 pai´ses en los u´ltimos 15 an~os, estudiamos el impacto de la aplicacio´n prolongada de una poli´tica monetaria expansiva en la conducta relacionada con la toma de riesgos. Observamos que el coeficiente de endeudamiento, asi´ como otros indicadores de la vulnerabilidad a nivel de las empresas, aumenta para para los bancos y las entidades no bancarias internas mientras persiste la poli´tica monetaria expansiva en el pai´s. Los efectos transfronterizos tambie´n son notables. Observamos efectos de magnitud ma´s o menos similar en empresas extranjeras del sector financiero cuando Estados Unidos adopta una poli´tica menos restrictiva. Los resultados parecen ser robustos frente a una variedad de especificaciones, y parecen ser no lineales, y se observa que el comportamiento de toma de riesgos aumenta ma´s ra´pidamente cuando empieza a aplicarse la poli´tica de expansio´n monetaria.

Financial risk management.

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This paper marks the launch of a new IMF series, Fintech Notes. Building on years of IMF staff work, it will explore pressing topics in the digital economy and be issued periodically. The series will carry work by IMF staff and will seek to provide insight into the intersection of technology and the global economy. The Rise of Digital Money analyses how technology companies are stepping up competition to large banks and credit card companies. Digital forms of money are increasingly in the wallets of consumers as well as in the minds of policymakers. Cash and bank deposits are battling with so-called e-money, electronically stored monetary value denominated in, and pegged to, a currency like the euro or the dollar. This paper identifies the benefits and risks and highlights regulatory issues that are likely to emerge with a broader adoption of stablecoins. The paper also highlights the risks associated with e-money: potential creation of new monopolies; threats to weaker currencies; concerns about consumer protection and financial stability; and the risk of fostering illegal activities, among others.

Digital currency --- Electronic funds transfers. --- Payment. --- Consumer protection. --- Financial stability. --- Law and legislation. --- Consumerism --- Protection, Consumer --- Commercial policy --- Payment --- Commercial law --- Extinguishment of debts --- Performance (Law) --- Balance of trade --- Debtor and creditor --- EFT (Electronic funds transfers) --- Electronic banking --- Electronic check clearing --- Electronic money systems --- Electronic payments systems --- Electronic transfer of funds --- Funds, Electronic transfers of --- Telebanking --- Transfers of funds, Electronic --- Electronic data interchange --- Electronic benefits transfers --- Home banking services --- Law and legislation --- Banking --- Banks and Banking --- Banks and banking --- Banks --- Central Bank digital currencies --- Currencies --- Depository Institutions --- Digital currencies --- Distributed ledgers --- Financial services industry --- Foreign exchange reserves --- Government and the Monetary System --- Industries: Financial Services --- International reserves --- Micro Finance Institutions --- Monetary economics --- Monetary Policy --- Monetary Systems --- Money and Monetary Policy --- Money --- Mortgages --- Payment Systems --- Regimes --- Standards --- Technological innovations --- United States

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The impact of monetary policy in large advanced countries on emerging market economies—dubbed spillovers—is hotly debated in global and national policy circles. When the U.S. resorted to unconventional monetary policy, spillovers on asset prices and capital flows were significant, though remained smaller in countries with better fundamentals. This was not because monetary policy shocks changed (in size, sign or impact on stance). In fact, the traditional signaling channel of monetary policy continued to play the leading role in transmitting shocks, relative to other channels, affecting longer-term bond yields. Instead, we find that larger spillovers stem more from structural factors, such as the use of new instruments (asset purchases). We obtain these results by developing a new methodology to extract, separate, and interpret U.S. monetary policy shocks.

Monetary policy --- Capital movements --- Regression analysis --- Analysis, Regression --- Linear regression --- Regression modeling --- Multivariate analysis --- Structural equation modeling --- Econometric models. --- Banks and Banking --- Finance: General --- Macroeconomics --- Money and Monetary Policy --- Externalities --- Interest Rates: Determination, Term Structure, and Effects --- Monetary Policy --- Price Level --- Inflation --- Deflation --- General Financial Markets: General (includes Measurement and Data) --- Finance --- Monetary economics --- Spillovers --- Yield curve --- Unconventional monetary policies --- Asset prices --- Emerging and frontier financial markets --- Financial sector policy and analysis --- Financial services --- Prices --- Financial markets --- International finance --- Interest rates --- Financial services industry --- United States

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Cross-border payments are expensive, slow, and opaque. These problems reflect multiple frictions, many of which boil down to limited trust among counterparties. Trust plays a central role in exchanging credit-based money. End users need to trust the issuers of money, and issuers must trust users to satisfy financial integrity requirements. Transactions are possible only where trust links exist. Interoperability between different forms of money can thus be conceptualized as the network of trusted links necessary for transactions. Traditionally, across borders, trust links involve exclusive bilateral credit relationships among correspondent banks. However, the fixed costs required to build these links foster an expensive and concentrated system. This paper interprets different payment arrangements in terms of the implied trust structures. It discusses how the tokenization of money alters trust links and allows for a potentially more efficient market structure to exchange money. The paper ends with a suggested global marketplace to trade tokenized money directly across borders.

Digital currencies. --- Banks and banking. --- Monetary policy. --- Banking --- Banks and Banking --- Correspondent banks --- Currency crises --- Currency --- Distributed ledgers --- Economic & financial crises & disasters --- Economic sectors --- Economics of specific sectors --- Economics --- Economics: General --- Finance --- Finance: General --- Financial crises --- Financial markets --- Financial services industry --- Financial services --- Foreign exchange market --- Foreign Exchange --- Foreign exchange --- Government and the Monetary System --- Industries: Financial Services --- Informal sector --- International Financial Markets --- International Lending and Debt Problems --- Macroeconomics --- Monetary economics --- Monetary Systems --- Money and Monetary Policy --- Money --- Payment Systems --- Regimes --- Standards --- Technological innovations --- Technology --- United States