Summary of When Money Can No Longer Travel

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Rating

8 Overall

8 Importance

7 Innovation

9 Style


Recommendation

The ability of companies in some developing countries to conduct international business is at risk due to – paradoxically – “derisking.” Under derisking, global banks stop wiring money, exchanging currency or processing credit card payments for nations perceived as money-laundering or terrorist-financing risks. But, as Andreas Adriano of the International Monetary Fund explains, without these various forms of correspondent banking, businesses and citizens in emerging markets are choked off from the global financial system. getAbstract recommends this intriguing article to bankers and those traveling to or conducting business in a developing nation.

In this summary, you will learn

  • What “derisking” is, and why it’s occurring;
  • Why derisking could cut off global transactions for companies in developing countries; and
  • What policy makers can do to head off these problems. 
 

About the Author

Andreas Adriano is a senior communications officer at the IMF.

 

Summary

“Derisking,” in which international banks cease processing vital transactions such as money transfers, is taking a toll on nations that rely on global payments. In import-dependent Angola, companies might have to default on their payments to foreign suppliers. Resorts on Caribbean islands will have to turn away tourists if global correspondent banks refuse to handle credit card payments on behalf of local banks. The vast majority of Caribbean banks surveyed in 2017 have already seen one or more correspondent relationships yanked away due to derisking.


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