Needless Friction in our Banks: Marcus Treacher in City A.M.
The world's banking system runs on legacy technology and historic practices. This impacts the holding and moving of liquidity, preventing funds from moving efficiently around the world. This is bad enough in stable times, but when banks and central banks need to act fast in times of market stress, it's particularly painful. We have seen six central banks yesterday launch a US dollar "swap line" arrangement to boost the flow of US dollars through the global financial system and enhance the provision of liquidity, after an unsettled period in the US banking sector and the Credit Suisse takeover.
By replumbing the financial networks that support cross-border payments, these multiple points of friction and lack of visibility can be addressed. There is growing demand for a system that enables payments to flow faster and more reliably, removing friction and creating complete visibility over pools of liquidity around the world. Through this system, every international transaction could be matched to corresponding real-time institutional liquidity, and if funds are available, money can move between banks instantaneously and on-demand.
In times of economic instability, inefficient processes and slow transaction speeds become even more problematic. It's time banks prioritise removing all risk associated with moving money around the world, and adopt new technologies that will revolutionise the global payments industry.