In Chapter 3, The Author Describes Eight Core Functions Of T

In chapter 3, the author describes eight core functions of the global financial

In Chapter 3, the author describes eight core functions of the global financial service sector which blockchain technology will likely change. Choose one of these core functions and explain its importance in advancing today’s economy. Provide at least two real-world examples of how blockchain technology is currently transforming this function. Finally, formulate three discussion questions based on material from Chapters 1, 2, or 3 to engage other students.

Paper For Above instruction

The rapid evolution of blockchain technology has significantly impacted the core functions of the global financial services sector. Among these, the function of cross-border payments stands out as particularly critical in driving the modern economy forward. Cross-border payments facilitate international trade, remittances, and global economic integration, making them a cornerstone of international finance. Traditional mechanisms for these transactions are often slow, costly, and opaque, which hampers economic efficiency and financial inclusion. Blockchain technology offers a transformative solution to these challenges, enhancing speed, reducing costs, and increasing transparency in international monetary transfers.

Cross-border payments are essential because they enable seamless economic activity across nations. They support multinational corporations, small businesses engaged in international trade, and individuals sending remittances to family members abroad. Efficient cross-border payment systems reduce transaction times from several days to near-instantaneous transfers and cut associated costs, fostering economic growth and financial inclusion. For example, Ripple’s XRP blockchain facilitates fast and low-cost international payments by providing liquidity solutions that bypass traditional correspondent banking networks. Similarly, Stellar’s blockchain platform offers a decentralized and cost-effective approach to cross-border transfers, especially benefiting populations in developing countries who have limited access to conventional banking services.

One real-world example of blockchain transforming cross-border payments is the partnership between Santander Bank and Ripple, which uses Ripple’s protocol to process international transactions more swiftly and at a fraction of the traditional cost. This integration exemplifies how blockchain can optimize existing financial infrastructure for enhanced efficiency. Another example is the use of Stellar for remittances in developing countries like the Philippines, where companies deploy Stellar-based platforms to enable cheaper and faster remittance services, significantly improving financial inclusion and stability in local economies.

Understanding these examples underscores the importance of blockchain in revolutionizing cross-border payments—an essential function underpinning global economic connectivity. As blockchain technology continues to evolve, it promises to further streamline international transactions, reduce fraud, and support the broader goal of inclusive economic growth.

Discussion Questions

  • How can blockchain technology enhance financial inclusion in countries with limited banking infrastructure?
  • What are the potential risks and regulatory challenges associated with implementing blockchain for cross-border payments?
  • In what ways might blockchain-driven improvements in cross-border payments impact traditional banking institutions?

References

  • Narayanan, A., Bonneau, J., Felten, E., Miller, A., & Goldfeder, S. (2016). Bitcoin and Cryptocurrency Technologies: A Comprehensive Introduction. Princeton University Press.
  • Catalini, C., & Gans, J. S. (2016). Some Simple Economics of the Blockchain. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.2874598
  • Tapscott, D., & Tapscott, A. (2016). Blockchain Revolution: How the Technology Behind Bitcoin Is Changing Money, Business, and the World. Penguin.
  • Rogers, D. (2017). Ripple and Its Impact on Cross-Border Payments. Journal of Financial Innovation, 3(2), 45-52.
  • Stellar Development Foundation. (2020). How Stellar Is Transforming Remittances. Stellar.org.
  • World Economic Forum. (2018). The Future of Financial Infrastructure: An Ambitious Look at How Blockchain Will Transform Payments. WEF Reports.
  • Yermack, D. (2017). Corporate Governance and Blockchains. Review of Finance, 21(1), 7-31.
  • Beck, R., Müller-Bloch, C., & King, J. L. (2018). Governance in the Blockchain Economy: A Framework for Future Research. Journal of Management Information Systems, 35(2), 510-544.
  • International Monetary Fund. (2019). Digital Money and Cross-Border Payments. IMF Policy Paper.
  • Gonzalez, P., & Garcia, R. (2019). Blockchain Technology in Financial Services: Opportunities and Challenges. Journal of Innovation Management, 7(3), 56-67.

Related Assignments