The future of cross-border wholesale payments: Mobilising central bank money across borders

Large-value cross-border payments constitute the life-blood of international trade and commerce and are thus crucial to national economies. This paper explores this high-value payment ecosystem, which has become more complex and expensive following the prudential regulatory reform rolled out in response to the global financial crisis. Recent technology innovations, in particular the emergence of blockchain and distributed ledger technology, have led to the creation of a parallel system of value transfers based on crypto currencies. The combination of cloud computing, software innovations and the increased use of application programming interfaces has enabled the creation of new business and technology models that are innovating this space. On top of this, the arrival of central bank digital currencies may have the potential to support cross-border payments, both retail and wholesale. This paper explores how far these developments can support a better system for large-value cross-border payments, providing a number of examples of real-world business approaches. A critical lens is applied to gaps outside of the technology field, such as central bank policies and liquidity management, which will need to be closed before true innovation can occur at scale.