Financial Services Revolution by Alex Tapscott;

Author:Alex Tapscott; [Неизв.]
Language: eng
Format: epub
Publisher: Independent Publishers Group

CHAPTER 4

REINVENTING INTERNATIONAL CLEARING AND SETTLEMENT

How Distributed Ledger Technology Could Transform Our Global Payment System

Bob Tapscott

THE GLOBAL PAYMENT SYSTEM IN BRIEF

•The global payment system is the lifeblood of world commerce. In the Internet era, the sluggish pace, high cost, and opacity of international funds transfers, both corporate and consumer, are a source of frustration. Money seems to hang in limbo between institutions for days. Clearing a check from France to the United Kingdom within a bank that has a large presence in both countries can take six to eight weeks!221

•Transfers are typically based on messages sent through the Society for Worldwide Interbank Financial Telecommunication (SWIFT) network. Most banks will not respond to an international funds transfer request unless it arrives via the highly secure and trusted SWIFT network. Although SWIFT messages for the movement of funds are near instantaneous, legacy processes within the banks are not.

•Emerging blockchain technologies may diminish or even replace SWIFT and the systems it supports. Distributed ledger technology (DLT) introduces three possibilities for speeding transfers and lowering costs:

•DLT obviates the need for layer upon layer of complex systems talking to complex systems to manage risk, while adding fees for their services.

•DLT enables funds transfers between countries without any significant delay.

•In DLT, trust derives from mathematics, not from fallible humans and their systems.

•As international commerce has exploded, it has demanded a lower-cost system with fewer time-consuming intermediaries. Smartphone applications will become the ubiquitous payment mechanism for the unbanked. Near-and nonbank payment systems are flourishing with and without blockchain.

•This is a game changer. Consumers and corporations will know exactly when their funds will arrive and need not guess at the final currency converted amount. Payment systems for the poor without intermediaries charging high fees will stimulate greater commerce by removing friction and inefficiencies that impede greater economic purpose.

•There are two approaches in technology to implementing dramatically new systems: (1) revolutionary (the big bang) and (2) evolutionary (the invisible whisper). Almost always, a massive change implemented quickly, no matter how well planned, has negative and unintended consequences. Therefore, the transformation of trillions in international payments made daily over to DLT technology must be evolutionary.

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