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Comment by toomuchtodo | Hacker News Reader

80 countries have instant/real time payment systems today [1], and the Bank for International Settlements is working on cross border interoperability [2].

Cryptocurrencies will likely never go away, and will remain in use for certain use cases from a cross border value transfer perspective, similar to gold; either the token moves or the ownership is updated. More interesting is offering digital wallets for a single or basket of currencies to anyone you can remotely identity proof in the world (similar to nsave [3]).

[1] https://www.volt.io/real-time-payments-world-map/

[2] https://www.bis.org/about/bisih/topics/fmis/nexus.htm

[3] https://www.nsave.com/ | https://www.ycombinator.com/companies/nsave

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On top of that, the BIS isnt even needed for global real time payments. A company like Wise (formerly transferwise) or any similar entity can just hold accounts in each country and if the local settlement is real time they can also do real time global settlement by just updating their db and sending the money real time in the receiving location.

This is how they all work including western union. It's not a secret but it's not really talked about either.

No one pays FX fees on each transfer. Single large rebalancing transfers allows them to actually move money at optimal times and rates with bulk discounts. Then they can currency hedge and get larger spreads on the actual fx rate.

Yup, the point was, local real time = global real time. Local real time has been the actual thing required.

Kind of a tangent but I have some friends that are kurdish and that's how they transfer money to and fro the US and skirting whatever limits/regulations exist. They just give money to a money family in kurdistan and the money family here in the US hands it to them out of a restaurant or whatever. I've been fascinated with it since I knew it existed. It's all the same stuff with various coats of lipstick.

Don’t they need to pay for the plane ticket?

No they mean that a family member in the US gives them some of their own money, but records it to a family ledger. At some other point funds or value will be transferred, but it isn't transferred within the family for every payment.

This is exactly what it is. I kind of dig it and I'm glad I know the name now

Someone posted a link in response to you, but no money actually crosses borders.

I think the best way to explain it is an example.

My contact needs to get money to his family across the world. I happen to have a cousin that I love and trust who lives there and runs a gas station. My contact gives me 10k USD + a fee and then I call my cousin and tell him to give 10k to the contact's family member if they give the right password. At the end of the year, I meet up with my cousin and I bring him some gold or other goods depending on what our deficits are to each other.

Maybe this is a dumb question, but how is the "single large rebalancing transfer" accomplished? I don't know of any machine where dollars go in one side, are destroyed, and euros are created on the other side.

My assumption was that it usually comes down to finding someone else with money in both currencies (i.e. a large bank or government) and exchanging one for the other. Of course that's unsatisfying: it's not just turtles all the way down.

Ultimately if I'm running out of, say, USD, and have a lot of CAD, I have to to buy a bunch of something for CAD and sell it in USD. If you wanted a "zero banking" currency transaction I guess the way to do it is to park on the Canadian side of the border, buy imports to the US, walk across to the US, and sell them.

Or maybe there's a magic money shredding / printing machine that I didn't know about. I guess an international treaty could actually authorize such a thing.

> it's not just turtles all the way down

If you drill far enough... well anyway

> I don't know of any machine where dollars go in one side, are destroyed, and euros are created on the other side.

The Treasury is the machine you're looking for. And the wire transfer, SWIFT, usually, is the tool of choice. In a sense, yes dollars are "destroyed" in that they leave that monetary system. Banks like BoA hold a few kind of ledgers with the country's central bank one which gets discounted during the outflow.

So euros are then credited to whatever institution you transferred it to. That country just became that much richer.

This is why places like HSBC, CITI have free transfers for intra-bank but you still pay $15 for the same via wire transfer? Why would you ever want to do that? beats me, but the point is you can and it has a very real affect on the system other than some internal database going +/-.

But in the end, it's the country's central bank credit/debiting any institution and then just... printing? when it wants? but other countries... m1... foreign debt.

so yea, turtles.

> The Treasury is the machine you're looking for... In a sense, yes dollars are "destroyed" in that they leave that monetary system.

So are you saying there's an procedure where the US treasury takes USD out of circulation, and the ECB introduces the equivalent in Euro, according to some official exchange rate? How do they set the exchange rate?

No, of course there isn't. The explanation is absolutely ridiculous.

Go ask chatgpt, it will explain it quite well.

> The explanation is absolutely ridiculous.

You'll need to provide more constructive feedback. Or are you suggesting that it's not "destroyed" and that the origin country can freely transfer money without discounting its books?

There are so many problems with your explanation it's hard to know where to start. Just ask ChatGPT to explain it and go back and forth until it's clear.

Really, it's bad form to comment on something technical where you are just miles out of your depth.

This is very very wrong. Sheesh. Stop.

Yes, at some point you have to load a plane with cash. The point is that each of the turtles can consolidate smaller payments to both minimize transfer fees and cancel out money flows running in opposite directions.

Yes, it's just the banks. They have both. It's really not rocket science.

It should be satisfying in the following sense - the financial system is nowhere near as complicated as it seems. There is no magic. If you find yourself feeling like there is some magic somewhere, just ask another question because there is likely just a word or a layer of indirection that is making something quite simple seem mysterious.

Well, at your suggestion I did ask ChatGPT, and it pointed to one sort of magic trick: currency swaps between central banks. That is (kind of) a machine where one type of money goes in one side and the other type comes out the other. There's even a cool tracker [1].

But yeah, it's mostly just market forces that keep things stabilized, it seems.

[1]: https://www.cfr.org/tracker/central-bank-currency-swaps-trac...

Even central bank swaps aren't magical. The ECB for example has an account for the US Fed, the same way they have an account for HSBC or whatever. The ECB can credit the account for the US Fed, the same way it can for anyone else.

The main trick that folks get hung up on (and, you might be too) is that most "money" is just an IOU from a bank. We've just created a sophisticated way to trade the IOUs and call it "money".

This is pretty much what I was asserting in my original post, my question was if there was some additional mechanism beyond simple market forces.

It's not inconceivable (nor magical in any way) to imagine treaties that would allow an actual conversion from one currency to another, where USD go in one side and Euro come out the other. Situations like this have existed in the past: currencies have been converted when, for example, the former currencies in the Eurozone were converted to Euros.

No such situations exist right now: entities just hold multiple currencies and exchange them for you.

It's simpler than you are imagining. In practice, anyone can make USD go in one side and EUR come out the other. It's just the notion that something is "destroyed" which is wrong. If I owe you x USD, you can call me and we can agree I now owe you y EUR. If my name is "JP Morgan Chase Bank", it's really easy. And, the "m1 money supply" just changed. But, m1 is kind of nonsense because... it includes checking account deposits which are just IOUs from banks. So, no one just got richer (the bank still owes you money) and nothing is really going on.

Your mental model is falling down around the definition of "currency", "money" etc. It isn't what you imagine it is. We just have a system for trading bank receivables and call it "money".

I appreciate the replies, and asking chatgpt is good advice.

It took some prompting to get it to say "It's really not rocket science." though.

https://chatgpt.com/share/67fa2c5f-d940-800a-bdad-b723e763e0...

The condescension is towards people in finance pretending there is a lot of complicated stuff going on, not towards people trying to parse it.

> Wise (formerly transferwise)

Off-topic, but: this is possibly one of the world's dumbest rebranding exercises. I forget now how many years ago they made the change, but I've never heard anyone outside the company itself refer to it as just "Wise" without adding "(formerly transferwise)".

Runner up: Strategy (formerly MicroStrategy)

someone somewhere needed a promo...

Followed by gross new brand styling

Could've at least gone with calling themselves "Wise.com" or something, like "Make.com" does.

Got nothing on "X" though. Have yet to hear someone in person say "on X" rather than "on Twitter".

Really? You don't like the pea-soup on vomit color scheme?

I've been a loyal user of wise for more than a decade, since I used them to pay for my cross-currency wedding, and I can accept the name change since they wanted to show they were more than just money transfer (but just make it "bankwise", ffs), but the new brand style was a disaster.

Notice they dialed it down over time,it's now more neutral than at launch, so someone must have listened to the complaints.

I've been with them a while also and haven't noticed a huge change apart for switching the colour from blue to green?

Site from 4 years ago "The cheap, fast way to send money abroad" https://web.archive.org/web/20210305145221/https://wise.com/

vs now "Send money globally for less" wise.com

They also switched to the peculiar slanted round font ("wise sans"), and padded every page with whitespace so it has a much lower information density. The actual experience past login never had much so yeah it's not as much a change as the public branding.

But mostly, it's the light-green-on-dark-green text which I dislike, and I _think_ they dialed down its usage compared to e.g. the brand announcement[0] and how the blog looks[1] compared to the main site. Then again, de gustibus.

[0] https://wise.com/community/en/brand-new-look [1] https://wise.com/gb/blog/welcoming-libby-to-the-board

Oh yeah, the second one [1] is kind of ugly.

I think it's kind of a status thing that you can afford a short word domain like wise.com. But yeah, in conversation I still call them transferwise.

"Certain use cases", yes

(DRUGS)

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