Key takeaways
- Local settlement does not eliminate the need for FX; it changes where and how FX is managed.
- Payment connectivity and liquidity arrangements are essential.
- Interoperability between domestic systems can complement local-currency settlement models.
International payments ultimately require a way to manage differences between currencies. Local-currency settlement can reduce certain layers of intermediation, but it does not remove the economic role of FX.
For local settlement to scale, participants need confidence in liquidity, pricing, convertibility, settlement finality and regulatory arrangements.
The most effective models are likely to combine payment interoperability with efficient FX and transparent settlement.
CCPI note: This article is an independent professional perspective for information and discussion. Regulatory, legal and tax matters should be verified against the latest official requirements and, where appropriate, with qualified professionals.