Cross-Border Payments Integration in Latin America and the Caribbean
IMF Working Papers, June 14, 2024
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- Cross-Border Payments Integration in Latin America and the Caribbean
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Bibliographic details
- Authors: Dimitris Drakopoulos, Yibin Mu, Dmitry Vasilyev, Mauricio Villafuerte
- Published: June 14, 2024
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9798400279584.001
Summary
- Cross-border payment inefficiencies are a significant barrier to trade both within Latin America and the Caribbean (LAC) and between LAC and other regions.
- The paper provides a comprehensive review of historical efforts undertaken by various countries within the LAC region to address these challenges.
- The paper explores the potential of recent financial innovations, such as digital currencies and blockchain technology, to enhance cross-border payments.
- While new technologies do not substitute for prudent and credible macroeconomic policies, leveraging these technologies can help LAC countries reduce transaction costs and times, thus enhancing economic efficiency and fostering deeper regional and global trade relationships.
Major themes and subjects
- Anti-money laundering and combating the financing of terrorism (AML/CFT)
- Crime
- Currencies
- Economic integration
- Financial inclusion
- Financial markets
- Money
- Payment systems
Key findings and observations
- Cross-border payment inefficiencies are a significant barrier to trade within LAC and between LAC and other regions.
- Historical efforts by various LAC countries to address cross-border payment challenges are reviewed comprehensively.
- Recent financial innovations (digital currencies, blockchain technology) have potential to enhance cross-border payments but do not replace the need for prudent and credible macroeconomic policies.
- Leveraging financial innovations can reduce transaction costs and times and thereby enhance economic efficiency and foster deeper regional and global trade relationships.
Policy implications and considerations
- Adoption of financial innovations (including digital currencies and blockchain) should be considered as part of broader reforms that include maintaining prudent and credible macroeconomic policies.
- Policies aimed at reducing transaction costs and times can support enhanced economic efficiency and deeper trade linkages regionally and globally.
- Attention to AML/CFT and related regulatory frameworks remains an important component of cross-border payments integration.
Content in this bundle
- Working Paper