Definition ∞ Correspondent banking replacement refers to the potential for blockchain-based systems to supplant traditional correspondent banking relationships. These systems aim to offer more efficient, cost-effective, and faster cross-border payment solutions. Digital assets and decentralized ledger technology can facilitate direct value transfers between institutions without relying on a network of intermediary banks. This substitution seeks to streamline international transactions.
Context ∞ The current discussion surrounding correspondent banking replacement highlights the advantages of blockchain solutions in reducing settlement times and operational expenses for international transfers. Key debates involve regulatory acceptance, interoperability between different blockchain networks, and the scalability of these new systems compared to established financial infrastructures. A critical future development will be the widespread adoption of central bank digital currencies or permissioned enterprise blockchains to facilitate direct interbank settlements.
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