Definition ∞ Interbank settlement efficiency refers to the speed and cost-effectiveness with which financial institutions exchange funds and settle transactions with each other. Improvements in this area reduce operational friction and systemic risk within the global financial system. Enhanced efficiency allows for faster payment processing and better liquidity management. Distributed ledger technology offers promising solutions for this domain.
Context ∞ The drive for interbank settlement efficiency is a major focus for central banks and financial institutions, with blockchain technology frequently cited as a potential solution. News reports often cover pilot programs and research initiatives exploring the use of digital currencies or distributed ledgers for cross-border payments. The debate centers on how to modernize these systems while maintaining security and regulatory compliance.
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