Exploring Cross-Border and Domestic Payment and Contracting Platforms, Speech by Tobias Adrian

June 19, 2023

As Prepared For Delivery

Good afternoon. It is a great pleasure to be here in Rabat with you today.

Morocco welcomes us with its warm hospitality and stunning landscapes. This is a land of sea and mountains—of open horizons and rock-solid stability. Throughout its history, Morocco has also been at the crossroads of cultures and commerce.

It is thus fitting to speak of cross-border payments here in Morocco, of innovation, change and exchange, but also of steadfast commitment to macro-financial stability.

My remarks begin with money, which lies at the foundation of the financial system. Contracts are denominated in money. Exchange is conducted in money. And policymakers play a major role in the management of money.

In today’s digital age, technology presents an opportunity for money to evolve. Cryptography, tokenization, and programmability are explored around the world as a basis to improve money. From banks to central banks, the aim is to offer money that can sit alongside our messaging apps, work efficiently, and be even safer.

Today, I would like to explore some of the infrastructure behind money and present a blueprint for improvements—a new class of cross-border and domestic payments and contracting platforms.

My aim is to paint a picture, and inspire many of you to pick up your own brushes, like the remarkable artisans in Rabat’s Medina, and continue to refine the painting. I will argue that today’s new technologies allow the public sector to renew the infrastructure supporting cross-border payments and possibly domestic ones as well. This will bring people together through faster and cheaper payments, and countries together through a more stable and cohesive international monetary system. It’s about technology, but it’s also about governance, which establishes the “rules of the game.” These are tricky to establish, but an organization such as the IMF with its wide membership, focus on macro-financial interactions, and well-oiled internal governance can help countries build consensus.

My remarks draw on an IMF Fintech Note we will publish today entitled “The Rise of Payment and Contracting Platforms.” The work is rooted in a working paper published last November with Federico Grinberg and Tommaso Mancini-Griffoli at the IMF, and Robert Townsend and Nicholas Zhang at MIT.

The future of cross-border payments

Cross-border payments are more complicated than payments made within a single country. They involve the exchange of value between parties located in different jurisdictions and subject to different laws.

When a Moroccan ceramics business exports dinnerware to nearby Spain, it receives money in its account through a complex web of interlinkages between banks, possibly going through Paris and New York. The payment is routed through banks that know and trust each other. Money does not really change hands; instead, each bank offers credit to the next one in line. As a result, the small Moroccan business may face delays in receiving money and will pay high fees, hurting its bottom line.

Things are worse for those sending remittances who often pay even higher fees—about 6.5 percent on average. Costs fall disproportionately on the poor. While cross-border payments work relatively well in the club of most advanced economies, they fall short for many emerging-market and lower-income countries.

The cost, sluggishness, and opacity of cross-border payments comes from limited infrastructure. Settlement is risky. Governance is sporadic, giving rise to substantial legal and operational costs. Recourse is expensive.

To get global finance right, we must come together to get global payments right. Some of the 45 billion dollars paid to remittance providers every year may then go back in the pockets of the poor.

Steps are being taken. In a strong show of multilateral cooperation, the international community is enhancing cross-border payments following the G20’s 2020 Roadmap. More than ever, the IMF, World Bank, BIS, and FSB have been tightly collaborating, each bringing its comparative advantage to the table.

Framework of the XC platform

Our work on platforms aligns well with this thrust, and indeed has benefitted from discussions with others and the exploration of many central banks around the world.

Platforms are like digital town squares where people and businesses meet to transact under the watchful eye of the local authorities. Much like town squares must have been in bustling Fez back in the 8th century or in Marrakesh’s beautiful Medina.

Expressed in today’s language, the vision is for a trusted ledger, which is essentially an electronic document representing property rights on which digital versions of central bank reserves in any currency can be traded among participants.

But payments are not just the transfer of value from A to B. They require complementary services like obtaining foreign currency and managing risks. And they involve the transfer of information on the identity of transacting parties and their trading intentions.

So our trusted ledger cannot exist in a vacuum. It must exist in an environment allowing for basic financial contracts to be customized and exchanged in a safe and efficient manner. And it must allow information to be carefully managed—so only those who need it can see it.

Let me dive a little deeper and speak first about settlement, then about programming financial contracts, and finally about managing information. We call these the three layers of XC platforms.

Settlement layer

The platform would settle money denominated in many different currencies. Which forms of money? The safest possible to reduce counterparty risks. We propose central bank reserves. But each one sits on the books of central banks, in different accounting systems. To make these interchangeable, we propose creating unique and standardized digital representations of them on the platform.

To make a payment, participating banks would deposit their domestic central bank reserves in an escrow account controlled by the platform operator, and in return obtain a digital version to trade on the platform.

In the case of the Moroccan ceramics exporter, its bank would receive tokenized reserves from the Spanish customer’s bank. The exporter’s bank would credit the exporter’s account, but may not be terribly happy holding euro reserves. So it could sell them to another participant on the platform in exchange for domestic reserves.

Settlement would be quick, final, and safe. The ledger would be controlled by the platform operator, and only this operator would settle transactions. The single ledger would ensure there is a unique description of who owns what, so no double spending can occur.

Importantly, XC platforms would allow a multicurrency system, without imposing a single or new settlement asset. The choice of currencies used on the platform would remain at the discretion of participants. And central banks would remain in full control of which institution receives reserves to start with. No changes in legacy systems, arrangements, or institutions are needed.

Programming layer

Moving to the programming layer, when making payments participants may want to obtain foreign currency, synchronize or delay payments, and manage risks. And countries may wish to implement capital flow management measures. All these services could be programmed by customizing and bundling basic functions available on the platform.

Think of your smartphone apps. Developers created them by accessing and customizing pre-set functions allowing the app to respond to a tap on the screen, or to retrieve data from the GPS chip. But developers cannot interfere with the phone’s operating system and cause it to crash. So there is innovation, but it’s separate and safe. The same would occur on XC platforms. Basic functions would be available to customize and bundle to complement payments.

Programming also allows contracts to be automated. For instance, the concurrent swap of one currency for another can be programmed to occur when a certain price is met. Today, parties provide a market maker with their orders—which means giving up precious information. And even after agreeing to a trade, the other party can walk away. Settlement fails regularly.

Instead, automating contracts can bring improvements. First, agents may trust technology more than a market marker with their private information. And second, counterparties cannot walk away from an automated trade based on escrowed money. Finally, when programs run on the same ledger, they can be consistent with one another. So a contract to receive money tomorrow can be pledged as collateral today, saving precious liquidity.   

Let me briefly clarify that I am speaking here of programming one’s own transactions with money, not the money itself. Once transacted, money would go right back to being perfectly fungible. Let us not confuse a programmed transaction with a voucher—which is money that can only be spent on a given good.

Information management layer

The third layer of XC platforms is the information management layer. XC platforms allow the unbundling of settlement and non-settlement services including compliance checks. This leads to a cleaner separation of responsibilities. And countries retain jurisdictional control over how much their citizens and firms can hold or transact in foreign currency, as well as over compliance checks. XC platforms may even be able to contribute to upholding the highest standards of know-your-customer (KYC), anti-money laundering, and anti-terrorist financing.

Because compliance checks can occur outside the platform, transactions on the platform can preserve users’ privacy, but not their anonymity. This can bring significant advantages. For instance, participants would have the incentive to bid truthfully in a foreign exchange auction without being concerned with revealing private information, without having an incentive to mislead others, and without fearing that a market maker or private auctioneer would front-load their orders.

And while individual identities can be hidden, aggregate information can nevertheless be shared transparently, in real time. While bidding, for instance, seeing others’ anonymized bids is extremely valuable.


Finally, any platform needs solid, transparent, and effective governance that is accepted by participants as being fair and representative. A strong legal framework backing the platform, as well as active oversight and clear rules governing access, participation, and financing are essential.

Governance is also a way to adopt rules and designs to support the stability of the international monetary system. Platforms should allow countries to:

  • Implement capital flow management measures and continue to intervene in their foreign exchange markets when needed.
  • Extract aggregate information on capital flows to assist policymaking and detect fragilities.
  • Effectively resolve disputes to underpin trust and facilitate market integration.
  • Rapidly dispatch funds to support the global safety net.

And the list goes on. Payments, we must remember, are the foundation of the financial and trade links between countries. One of the important roles of the IMF is to oversee and strengthen these foundations for a stable and effective international monetary system.

Let me summarize briefly. XC platforms offer key advantages. They ensure safety by settling with central bank reserves. They offer interoperability among national currencies—and with legacy systems. They bring innovation, efficiency, and safety in contracting. They help manage information flows to overcome economic frictions. And, importantly, they rest on transparent, rule-based governance consistent with the stability of the international monetary system.

Platforms for CBDCs

While XC platforms are designed with cross-border payments in mind, their basic design is sufficiently general to also help domestic financial systems.

There too, we see potential transformations. Take, for instance, newly developed ledgers on which banks, brokerage firms, and fintechs are tokenizing assets (equities, bonds, and commodities) and money. While stablecoins have drawn much attention and some may develop into convenient forms of money if well regulated, less well known are the efforts of banks to explore tokenized deposits. After all, these are institutions that have innovated and adapted for hundreds of years. New technologies, and new legal and regulatory environments will be a hurdle to some but a springboard to others.

Innovation is good for end users and societies, but only if we can preserve interoperability, safety, and efficiency—just like in the cross-border space. So, do the same challenges mean the same solution? Yes, in the form of CBDC platforms—the domestic equivalent to XC platforms. Naturally, such platforms would be backed by strong legal and regulatory frameworks.

As money, CBDCs provide safety. As infrastructure, CBDCs bring interoperability and efficiency among private networks for digital money and assets.

A CBDC platform would be designed much in the same way as an XC platform. Its single ledger would be compatible with those of private firms. Assets could be escrowed for long enough to be paid with safe and liquid central bank money. In fact, the exchange could be programmed and automated to lower counterparty risks as discussed earlier. And assets or tokenized deposits themselves could be escrowed and exchanged directly. Privacy preserving technology and strong governance, which is easier to define domestically than internationally, would complete the picture.

Clearly, the examples above suggest a wholesale CBDC, but we can well imagine countries leveraging this infrastructure, namely CBDC platforms, to also make retail CBDC available to households and firms. In the end, countries will decide based on preferences, needs, and policy objectives.

The point is that many of the same benefits I discussed earlier for the XC platform could be realized domestically. The aim is to allow for innovation, but in an environment that strengthens public policy objectives.

CBDC platforms are a direction well worth investigating. In fact, several central banks have begun experiments along these lines, such as those of Brazil, the European Central Bank, England, France, Italy, and Singapore. We are following their impressive work with great interest.


As innovation tugs ahead, and payments evolve, the public sector too must consider renewing its infrastructure. New technologies, new entrants, and new needs have opened a window of opportunity to think ambitiously and improve domestic and cross-border payment systems, while continuing to pursue public policy objectives such as financial and monetary stability.

Our blueprint for a new class of platforms would enhance and ensure greater interoperability, efficiency, and safety in cross-border payments, as well as in domestic financial markets. More work will be needed in testing architectures and technology, and especially on legal underpinnings and governance arrangements.

This last point looks hard to implement. It will be. Multilateralism is hard. But it can work. Think of the Arab League, the Union for the Mediterranean, and the African Union, of which Morocco is a member. Or think of the IMF with its history of strong governance. We will be a strong partner on the road to improve cross-border payments. The IMF can help bolster trust in governance and oversight. It can leverage its convening power to build momentum around new ideas and evolve them in a direction consistent with the interests of member countries. And it can build on its policy expertise to suggest platform designs that support the continued stability of the international monetary system.

I am inspired by the Moroccan soccer team, which dreamt of big things. Like them, let us dream a little.

IMF Communications Department


Phone: +1 202 623-7100Email: MEDIA@IMF.org