Blame governments, not technology, for costly and inefficient international payments. But private cryptocurrencies could help.
U.S. border at El Paso, Texas.
(Justin Sullivan/Getty Images)
Apr 6, 2021 at 11:08 p.m.Updated Apr 6, 2021 at 11:09 p.m.
The Real Trouble With Cross-Border Payments
No, moving money internationally cannot be as easy and fast as sending an email. Cross-border payments are usually costlier and slower than national payments not because of technological limitations, but essentially because of politics.
When it comes to technology, many central banks and commercial banks take part in real-time payments networks that work smoothly. Even in the U.S., which tends to be conservative in payments initiatives, real-time payments have become more widespread since late 2019. FedNow, to be launched by the Federal Reserve in 2023, should push the adoption of instant payments forward.
At the international level, SWIFT, a provider of messaging services used by banks when processing cross-border payments, has also been working to improve funds transfer efficiency. The technology for faster payments exists and is already in use across the world. If, however, you or your company had to send money abroad recently, you know the process is far from being completed at the click of a button.
Marcelo M. Prates, a CoinDesk columnist, is a central bank lawyer and researcher.
If technology isn’t the problem, what then? Sovereignty is to blame. With rare exceptions, having control over money is as important for a sovereign as having military might: the powers of the purse and the sword. Most countries thus choose to have their own sovereign money, issued by a local authority and holding the irrevocable power to discharge any debt inside the sovereign territory – the legal tender status.