I never knew just how messed up the global banking system was until I moved to a foreign country and tried to get access to my own money. If ever there was a process that needs to be replaced by the crypto revolution, this is it. When I want to transfer money from my bank account in the US to my bank account in the country where I currently reside, it is always a multi-day, hair raising, overly expensive process that drives me crazy. In addition to traditional wire fees, unless I am trying to exchange a significant sum of money from one currency to another, the exchange rates charged by my American bank are nothing short of highway robbery. I was able to cheapen this back by opening a local FX account that I can wire funds into, but that is only because I am a bankable client. For migrant workers that don't have the same access to decent banking services, I know the fees are even worse when they try to send money back to their families.
That got me to thinking: Why is it so expensive to send money abroad? It's not like someone has to take the time to count out the bills, load them onto an airplane, fly them around the world, unload, and deliver to my local bank. We are talking about an automated digital transaction that requires no human intervention other than my own when initiating the wire. How do the banks justify what they are charging millions of people every day? This frustration led me down the road of studying how the system works. I'll summarize it with the informative graphic below published in a recent BIS (Bank of International Settlements) paper entitled: Central bank digital currencies for cross-border payments. July 2021.
When studying this graphic, two words came to mind: Global cartel. They can charge the fees because at least until now, we haven't had any other options. Is it any wonder that the regulators are now starting to pay more attention to stable coins? The beneficiaries of the current system have a lot to lose.