## Currency Usage for Cross Border Payments

_IMF Working Papers, March 24, 2023_

## Source details

**Canonical URL:** [Currency Usage for Cross Border Payments](https://www.imf.org/en/publications/wp/issues/2023/03/24/currency-usage-for-cross-border-payments-531324)

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## Bibliographic details
- Authors: Hector Perez-Saiz, Longmei Zhang, Roshan Iyer
- Published: March 24, 2023
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9798400235375.001

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### Summary findings
- Global usage of currencies other than the U.S. dollar and the euro for cross-border payments remains limited.
- Rapid technological changes (e.g., digital money) or geopolitical changes could accelerate a regime shift into a multipolar or more fragmented international monetary system.
- The analysis uses the Swift database of cross-border payments to empirically estimate:
  - the importance of legal tender status,
  - geopolitical distance,
  - other variables,
  - relative to large inertia effects for currency usage.
- Several forecasting simulations are performed to assess the role of these variables in shaping the future payments landscape.
- The results suggest a substantially more fragmented international monetary system would be unlikely in the short and medium term.
- The impact of new technologies remains highly uncertain.
- Much more rapid geopolitical developments than expected could accelerate the transformation of the international monetary system towards multipolarity.

### Methodology and analysis highlights
- Data source: Swift database of cross-border payments (used as the empirical basis).
- Empirical focus:
  - legal tender status,
  - geopolitical distance,
  - other determinants of currency choice,
  - inertia effects in currency usage.
- Analytical approach: forecasting simulations to explore alternative future payments landscapes under varying assumptions about technology and geopolitics.

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_Source: https://www.imf.org/en/publications/wp/issues/2023/03/24/currency-usage-for-cross-border-payments-531324_