Correspondent banking

Correspondent banking is the system that moves money across borders in traditional finance. Banks hold relationships with one another, and a cross-border payment passes along a chain of these intermediary banks until it reaches the destination. Each bank in the chain can add a step, a fee and a delay, and the sender rarely sees the full path or total cost in advance. In corridors with thin correspondent coverage, such as many emerging markets, payments can be slow and expensive. This is the friction that stablecoin settlement is designed to reduce.