From the course: Understanding Cross-border Payments
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Market infrastructures in different countries
From the course: Understanding Cross-border Payments
Market infrastructures in different countries
What are market infrastructures, and how are they organized? To understand cross-border payments, we first need to grasp domestic payments, particularly the organization of market infrastructures, the clearing, and settlement systems within a country. This is our first step in understanding how cross-border payments work. Market infrastructures or payment systems worldwide are organized according to open-loop models. In these models, intermediaries exist between end parties and payment systems, with end parties using these intermediaries to access the systems. This is illustrated by the four-corner model, also known as a simplified open-loop model. Open-loop models show how payment systems are organized globally, composed of interbank transfer systems and central bank systems. Central bank systems are central to the model, playing a crucial role with interbank systems connected to them. Payment service providers can join one or multiple interbank systems, but they aren't required to…
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