Trade Finance and Programmable Money


Identify 2-3 insights related to how cross-border payments are evolving as a result of the use or introduction of programmable money. These insights should specifically be focused on how programmable money could potentially be the future of cross-border payments.

Early Findings

  • Programmable money operates without any third-party financial institutions (i.e. banks, credit card companies, payment companies, etc. Because of
  • According to a report published by IBM in 2018, cross-border e-commerce is currently growing at a rate of 20% annually and makes up approximately 40% of global banking revenues.
  • IBM conducted a study of three potential ways that cross-border, international payments could potentially take place with the use of programmable money (Custodial design, Correspondent design, Digital Asset design). The concept is that all of the steps of the payment process are combined into a single transaction that would take place in real-time.
  • The use of programmable money for cross-border transactions presents the opportunity to reduce money laundering and fraud.
  • In 2018, there were a total of $23.7 trillion transferred via cross-border payments, most of which were corporate payments. For these payments to take place, the two banks involved in the transaction had to maintain a direct bilateral correspondent relationship.
  • Right now, electric forms of cross-border payments that are easiest to use include Apple Pay, Samsung Pay, Google Pay, and Transferwise. These types of transfers work by transferring funds "from one e-wallet to another."
  • Programmable money and digital currencies would be convenient to use for cross-border payments because they cane contain the transaction information, fees, and crypto signatures within a "block" of the payment transfer. This information would easily be collected and stored with distributed ledger technology (DLT).
  • Cryptocurrencies that are backed by fiat currencies are more likely to transfer faster and more securely. As DLT-based payments become more popular and understood, it is more plausible that programmable money becomes more common for cross-border payments.

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