Cross-Border Payments – A New Beginning | Hacker News Reader

Cross-Border Payments – A New Beginning

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43 pointswalterbell22 comments

This is what the end of the dollar as global reserve currency looks like.

A major reason that the rest of the world still agrees to settle a huge portion of international trade in dollars is that we essentially have the only working pipeline system that can allow transactions for all of the different economies and currencies involved.

But many countries around the world are sick of it. We use it to enforce sanctions, implement foreign policy objectives, and force the rest of the world into a cycle of circular dependancy on our debt.

But enough major players are sick of it that it is falling apart. China, Russia, India, Brazil, most of the Middle East and a good chunk of Africa no longer see this system as providing value for them and they are eagerly looking for ways to settle trade directly in their own currencies and through their own pipelines.

If you notice Jerome Powell is on the first panel, which indicates that I think the US has accepted that this transition is going to take place and that they want to get to have as much say as possible in constructing the new system to get to try to retain as much of our power as possible.

But to me this signals the beginning of the end of the political era that started when the dollar was made to be the global reserve currency at Brettin Woods in 1944.

Not sure why you think this. The only difference is the protocol of which our already digital currency is facilitated through.

The dollar remains the global reserve currency because it has the most demand due to the purchasing power of US companies/consumers, has a remarkably predictable inflationary policy, and the government backing it is very well funded/stable.

In my opinion, you are reversing the causation. There is demand for dollars because it is the global reserve currency. This is enforced through treaties and trade agreements and other countries are structurally locked in to using dollars.

Why would that change just because it's being tracked with a blockchain?

First, this is a misconception that central bank digital currencies are about blockchain. Some of the proposals have block chain tie ins some dont but at its core this is not about block chain or crypto.This is about payment pipelines and central bank policy options and does not imply a technical architecture.

Secondly, the whole point of creating new pipelines is to enable new trade agreements that aren't dollar centric. Yes you still have dollar obligations from past trade debt and you might have some future obligations to trade in dollars but your bargaining position changes once there is another viable option on the table.

Not at all, the American consumer's/company's demand for U.S. dollars is because taxes must be paid in dollars to the US Government

Let's agree to disagree.

>But enough major players are sick of it that it is falling apart. China, Russia, India, Brazil, most of the Middle East and a good chunk of Africa no longer see this system as providing value for them and they are eagerly looking for ways to settle trade directly in their own currencies and through their own pipelines.

China, Russia, India, Brazil, most of the Middle East and a good chunk of Africa have always been able to accept renminbi, rubles, rupees, reals, etc. They prefer dollars to those other currencies, regardless of cross-border payment methods. This won't change a thing.

> Have always been able to accept.

Legally yes, practically no.

You seem to be under the impression that when an American, Japanese, or German businessman goes to India, Russia, or Africa, it's the businessman who chooses the currency. No; nine times out of ten it's the locals who want US dollars.

The hegemony of the dollar system isn't simply because it is the only game in town. The military, economic and geopolitical factors which underpin it are the reasons that it is the only game in town. These underlying factors won't go away simply because the implementation details of the currency change.

Perhaps it will come to pass that the US is no longer the dominant geopolitical player or currency issuer. Davos etc. would prefer to have a supranational hegemon. They have been planning and advocating for this for decades.

It is not hard to imagine globalist interests corralling a multipolar world into their schemes. They need only play the edges against each other until they meet in the middle. They're experts at positioning the goalposts.

Even further afield is the idea that the CCP will take the driver's seat.

Either way, I find it hard to believe that these top-down solutions will provide anything other than a paradigm of increased centralized control as implemented by a single dominant player.

In my view the policy options for CBDC are the primary motivators. Taxation, tracking and 'stimulus' measures are better served by CBDC. It is a technocrat's wet dream.

Who will be implementing it isn't as relevant. If I had to guess I'd say the existing paradigm will continue and the globalist faction will continue to push for dominance. Even Libra was modeled after the SDR.

The US can't fight the whole world at once.

I agree that there won't be any top down solution, and I dont think the usd losing its status means it gets replaced by another individual thing. I think it will slowly fade away as new pipelines open up and my thought was that these talks represent an attempt to open up those types of new pipelines.

Isn't a CBDC a top-down solution by definition?

Depending how you define the top. I don't believe they are intending one new globally synchronized and architected payment network.

Payments are not the problem of concern for central bankers: negative interest rates are. Legacy physical cash based fractional reserved banking is inherently not able to support aggressive negative interest rates as depositors can simply withdraw cash to avoid it. Digital currency can self amortise as it never leaves the ledger, allowing effective negative interest rates to turn the momentary policy crazy dial way past 11. Keynes would love the idea.

Did I miss it or was there no mention of companies like Transferwise at all?

From a laypersons perspective this seems exactly how the "private sector stepped in" to fix the problem, with a solution that's actually out there and working well, without the need for blockchain or other form of digital currencies.

They really only work for OECD countries effectively currently.

Systems like stellar.org just really are netting systems for disparate counterparties.

I’m a bit surprised that none of the panelists are coming from SWIFT (or Ripple) while they have the CEO of Stellar.

That seems to me still too conservative. What about Transferwise, which actually offer easy and cheap cross-border, multi-currency transfers right now?

the are good for EU (EURO)- USD (USD) and start to get expensive on other corridors.

I get better rates with interactive brokers which aggregates several banks. 2 pips and free transfers.

Did I skim too fast, or no mention of micropayments at all?

edit: In combination with something like Central Bank Digital Currencies are coming

[1] https://news.ycombinator.com/item?id=24818319

Maybe they are not as interested in actual business use cases?

The primary goal seems to be the extra levers CBDC will give them in regards to monetary policy. Micropayments might not be visible from where they stand.

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