Merging Capital MarketsWith Blockchain innovation
Cross-border Transactions on an IMF unit of account
The SDR token can be used in international settlements between multinational organisations who ultimately are exposed to foreign exchange rate fluctuations.
- Multinationals have complex agreements between each other
- All parties need to hedge their foreign exchange exposure
- Hedging can be expensive and requires intermediaries
- The SDR token can be used to simplify the settlement procedures and reduce the number of intermediaries involved, hence saving sizeable costs
The SDR token can be used as a means of transferring liquidity between financial institutions and cryptocurrency exchanges
- Dominant currencies in cryptocurrency trade flow: USD; JPY; KRW; EUR; GBP
- Due to the multicurrency nature of SDR composition the dominant currencies corresponding to trade flow are represented inside the price determinants of the SDR. Hence, using SDR as a liquidity aggregator between institutions and exchanges can drastically improve transmission of value
- SDR simplifies foreign exchange exposure to a single unit of account
The SDR token can be used as a means of foreign remittance.
- Payment providers and Remittance Institutes can opt to use SDR as a transmitting vehicle to improve the remittance inertia associated with traditional banking networks
- The low volatility of SDR in conjunction with its high foreign exchange stability makes it a better unit of account for global remittance
- Using the power of blockchain, transmission speeds are instantaneous, with minimal costs to the recipients
- SDR can allow national providers the ability to convert quickly to local currency
Banking the Unbanked
The SDR token can be used by the World Bank and UN for emergency relief in countries with undeveloped banking infrastructure.
- Difficulties with providing emergency relief in countries with high political corruption
- SDR token transactions are published on the blockchain, ensuring transparency and traceability, as well as enabling direct transmission from donor to recipient
- SDR is currency neutral and stable which could provide a foundation for micro-economies.
Countries cut off from banking can be supported directly utilising the SDR token as a proxy for international payment.
- Facilitates countries and corresponding citizens to receive medical and pharmaceutical goods
- Governments can collateralise natural resources in exchange for SDR to support the further development of the nation