The global financial industry is undergoing a period of significant change, fuelled by a combination of regulation, globalisation, economic crises and socio-political unrest. As new currencies come to the fore and shifts in economic power continue, the requirement for harmonisation across the global financial industry – in order to facilitate international trade and cross-border investment – has stepped up. This, in turn, means that our financial structure needs to change. Of course, that is easier said than done.
Yet what is interesting is that, at the same time, fintech innovation is enabling improved speed, efficiency, transparency and convenience, to become mainstream features of many of today’s transactions. These enhanced technology capabilities are resulting in growing expectations for an integrated, standardised system that can enable global corporate payments to be made with ease. So how viable is such a notion: a so-called “new international monetary system”?
Certainly, achieving such enhancements – and rolling them out on a global basis – would be a mammoth task. But blockchain technology, while still very much in its infancy, has lit the touch paper in the world of finance, leading many to believe that this vision may be a step closer to reality.
The blockchain concept is based upon the principle of a shared, open, irrevocable ledger, and were it to become widely adopted in the transaction arena, the entire payments process could become streamlined, with transparency, efficiency, speed of settlement, trust and security enhanced (for example, cross-border payment processing – which can currently take three to five days – could be settled in a matter of minutes ), and costs reduced. Cross-border payments could be processed in minutes.