The DCI’s Nicolas Xuan-Yi Zhang coauthored a paper at IMF on multi-currency exchange.
Cross-border payments can be slow, expensive, and risky. They are intermediated by counterparties in different jurisdictions which rely on costly trusted relationships to offset the lack of a common settlement asset as well as common rules and governance. In this paper, we present a vision for a multilateral platform that could improve cross-border payments, as well as related foreign exchange transactions, risk sharing, and more generally, financial contracting. The approach is to leverage technological innovations for public policy objectives. A common ledger, smart contracts, and encryption offer significant gains to market efficiency, completeness, and access, as well as to transparency, transaction and compliance costs, and safety. This paper is a first step aiming to stimulate further work in this space.
Read MoreSmart contracts are an often touted feature of cryptographic currency systems such as Bitcoin, but they have yet to see widespread financial use. In this paper, Tadge Dryja presents a solution he calls Discrete Log Contracts.
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