Cross-Currency Settlement describes the process of exchanging two different currencies between parties. It involves the simultaneous transfer of funds in distinct currencies to complete a financial transaction. This mechanism reduces settlement risk by ensuring both sides of the transaction occur concurrently. It is a fundamental aspect of international trade and financial markets.
Context
Cross-currency settlement is a key area where blockchain technology and digital assets offer potential improvements over traditional systems. News often reports on initiatives by central banks or financial institutions exploring distributed ledger technology for faster, more efficient, and less risky international payments. The discussion includes the role of stablecoins and central bank digital currencies in streamlining these processes.
This wCBDC-enabled issuance establishes an atomic settlement rail for tokenized real-world assets, drastically reducing counterparty risk and friction in capital formation.
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