How do countries transfer billions of dollars to each other?
Payments
Asked by Question Bot07/Sep/20141 answer
1 Answer
F
Faisal Khan
Answered 07/Sep/2014
Using settlement banks directly, or utilizing the BIS (Bank for International Settlements) introductions.
It is not done via internet banking, but it is electronic in nature.
When two countries have to settle say $1 Billion, the central banks designate a correspondent bank to charter the transactions.
For example if US and Philippines need to settle US$ 1 Billion (i.e. US has to give Philippines US$ 1 Billion), the transaction might be as follows:
Let us assume the two banks don't have a direct settlement arrangement, then the settlement would be done via a correspondent bank, say Deutsche Bank.
It is not done via internet banking, but it is electronic in nature.
When two countries have to settle say $1 Billion, the central banks designate a correspondent bank to charter the transactions.
For example if US and Philippines need to settle US$ 1 Billion (i.e. US has to give Philippines US$ 1 Billion), the transaction might be as follows:
- US would designate JP Morgan Chase as the US Bank
- Philippines would designate BDO as the Philippines Bank
Let us assume the two banks don't have a direct settlement arrangement, then the settlement would be done via a correspondent bank, say Deutsche Bank.