The International Monetary Fund (IMF) released a staff discussion note titled “Fintech and Financial Services: Initial Considerations”, which largely focused on how emerging fintech innovations and technology could affect cross-border payments and the potential for central bank issued digital currencies.

The paper considers cross-border payments “especially ripe for change” and could see benefits from new technologies.  Whilst domestic payments are settled by domestic banks and the central banks, the paper notes that cross-border payments require ad-hoc arrangements often between commercial banks.  Specifically, the paper proposes that blockchain and decentralised ledger technology (DLT) could improve how such payments are made, by considering potential benefits to back-end processes, compliance and means of payment.  

With respect to digital currency, the paper also suggested that a central bank digital currency could improve efficiency and significantly reduce some transaction costs, especially for individuals and small enterprises.  However, the IMF also warned that the potentially erratic valuation of virtual currencies may introduce risks.