Payment paths, politics, stories & speculation
Six o'clock already I was just in the middle of a dream / I was kissin' Valentino by a crystal blue Italian stream / But I can't be late 'cause then I guess I just won't get paid / These are the days when you wish your bed was already made – ‘Manic Monday’ by The Bangles: 1985
October has a bit of its own manic moment as some like The Banker rather than The Bangles from nearly 40 years ago have noted elsewhere given annual meetings of 世界银行 , International Monetary Fund , Institute of International Finance , Sibos (first time staged in the Chinese mainland) and events like Money20/20 in Vegas.
Yup, we have the UK budget this side of November, Halloween and then the US election. Yes, they both impact money matters ... though from a slightly different angle to this, and only two of those are annual.
Dialling it out, one story in the payments space I am curious about, particularly through a lens of what is and isn’t happening with China’s alternative to the US dollar and global payments system, is what angles and actions matter to how money might move real-time in coming years?
Taking off The Bangles, The Banker’s John Everington and Anita Hawser explore this with: Push for alternatives to US dollar and new payment systems accelerates as sanctions scale.
As they wrote:
"Beyond the attendance of several world leaders, and a perceived thaw in relations between the Brics’s two largest economies, India and China, the summit sparked international attention for Putin’s call for the bloc to establish an alternative international payments framework that runs alongside the current international architecture provided by Swift — one that promotes the use of an alternative currency to the US dollar."
Much has been written about how the BRICS group of nations is positioning to challenge the Swift bank messaging system. This increased as BRIC member countries, which account for around a third of the global economy, met in the Russian city of Kazan. The Banker was one of many to write on it.
Additional commentary links below in case of interest
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Earlier this year, The Economist ran a report: National payment systems are proliferating / with the sub-headline: That spurs competition, innovation and cross border frictions
One paragraph in this popped for me:
“Russia is an extreme case of a broader trend: national payments networks have sprung up around a world once dominated by Western ones. Mostly they have arisen not from a desire to dodge sanctions while invading a neighbour, but to provide vital digital infrastructure for the populations of fast-growing economies. Their architects also crave the revenue streams and political clout that come with the control of payment rails underlying global commerce. Yet they, too, have one eye on the West’s weaponisation of the financial system, and are looking for ways to avoid falling victim to it. The most developed of these examples are in China and India.”
If you are interested in this part of the payments landscape and have not read it already, two years ago, the Center for Strategic and International Studies (CSIS) published an essay by Barry Eichengreen titled: Sanctions, SWIFT, and China’s Cross-Border Interbank Payments System.
It’s longer than a two-cup coffee read but it does provide a reasonably robust insight into the pros and cons, history and dynamics of how China is building an alternative to SWIFT.
If I read it correctly it basically argues that alternative payment pathways will happen.
It is a matter of when and what one does or does not do - if that is in your business / geo-political risk management remit - to prepare for them.
How money moves around this planet - increasingly towards near real-time, ideally with an audit trail for transparency, legal and regulatory legitimacy REALLY matters.
#thoughtfortheday / #payments / #banking# / #money / #settlement / #clearing / #tech / #data / #regtech #geopolitics