The financial sector is undergoing a transformative evolution - technology, governance mechanisms, economic forces and policy actions are shaping the trajectory of money.。From metal coins to fiat money, from paper letters of credit to account-based systems, the history of money has witnessed significant changes.。As cash usage declines globally, digital innovation is taking center stage, offering new opportunities for the evolution of currencies。

Today, technological advances such as cryptography, tokenization and programmability are paving the way for the next phase of financial innovation。Banks are exploring the tokenization of deposits, central banks are experimenting with digital currencies, and fintech companies are innovating at all levels of money and payments.。

This shift is not limited to the domestic sector, but extends to cross-border payments.。Challenges remain in terms of limited infrastructure, fragmented governance, high recourse costs and high risk of settlement assets。However, the international community is actively seeking a solution.。

Building on last year's XC (Cross-Border Payments and Contracts) platform proposal, the International Monetary Fund has released a document that sets out a vision concept that could reshape cross-border payments on a global scale.。The proposal envisages the creation of a trusted ledger similar to a "digital municipal plaza," allowing a digital version of the central bank's reserves to be traded efficiently between participants.。

The future of cross-border payments and platforms

In this landscape, a new class of platform - the XC platform - could be a game-changer, the IMF said.。It operates in accordance with local rules and laws, provides a credible single ledger, efficiently exchanges digital representation of central bank reserves in any currency, aims to replicate basic financial contracts in a way that protects privacy, and promotes cooperation between public and private sector participants under sound governance, standards and rules.。

The XC platform brings scalability, security from central bank reserves, interoperability between national currencies, increased competition, efficiency in financial contract transactions, and innovation through programming。Importantly, they are based on transparent and rule-based management to support the stability of the international monetary system。

Evolution of CBDC

The XC platform is more than just a settlement asset, it is also a comprehensive infrastructure that provides a centralized ledger for cross-border payments.。It eliminates the need for multiple central bank digital currency (CBDC) wholesale projects, allowing commercial banks, payment providers and central banks to work together seamlessly.。While a distributed ledger (DLT) is one possibility, the report highlights that a centralized database could also power this transformative platform.。

Tokenization of existing central bank currencies

Most importantly, the XC platform did not introduce new settlement assets or currencies.。Instead, it relies on tokenizing existing central bank currencies through "characterization."。The central bank provides tokenized custody certificates, similar to CBDC, but limited to the XC platform, which greatly reduces the risk of counterparties and improves the security and efficiency of cross-border transactions。

Three Levels of the XC Platform

1.Settlement layer: This layer is the foundation that provides a secure and efficient ledger for cross-border transactions。

2.Smart contract programming layer: This layer supports conditional payments and programmability, ensuring flexibility without compromising the underlying ledger, in line with the preferences of many central banks。

3.Information layer: This layer protects personal information, facilitates compliance and currency control, and does not allow central banks to access sensitive data。

Advantages and Disadvantages of XC Platform

Improving the macroeconomic benefits of cross-border payments deserves attention.。Reduced transaction costs for SMEs, reduced remittance costs for poor households, enhanced liquidity in certain exchange rate corridors, and improved monitoring of capital flows are potential advantages。In addition, greater payment integration and transparent management can also offset the pressure of decentralization.。

Flexibility is critical when countries consider these XC platforms。These platforms can be applied to low-value retail payments, remittances or any payment stream, and as the number of participating countries increases, the benefits will increase。While the XC platform leverages new technology, it is designed to be compatible with existing payment systems and arrangements, providing a multi-currency system without imposing a single settlement asset.。

In summary, the XC Platform Blueprint sets out a vision that aligns with domestic and international policy objectives, offering a potential solution to the challenges facing cross-border payments.。Discussions around this blueprint are critical to refining the vision and provide a blueprint for countries to explore, cooperate and innovate in a changing financial environment.。