From Dollars to Crypto: IMF Tracks $1 Quadrillion in Global Cross-Border Payments

In a groundbreaking working paper published by the International Monetary Fund’s Strategy, Policy, and Review Department, researchers Eugenio Cerutti, Melih Firat, and Martina Hengge reveal that the global market for cross-border payments, encompassing both traditional and crypto flows, reached an estimated $1 quadrillion in 2024. This astonishing figure is drawn from a detailed analysis of SWIFT transaction data and crypto analytics from Chainalysis, making it one of the most comprehensive empirical studies of global payments to date. The IMF paper diverges sharply from previous market estimates, such as those by FXC Intelligence, which put the addressable cross-border payments market at $194.6 trillion, by including vast volumes of wholesale financial institution payments that are often ignored in commercial assessments. Despite the recent hype surrounding digital currencies, the report finds that crypto and stablecoin transactions, although growing rapidly, represented just $2.5 trillion of that total, a fraction of the overall payments ecosystem.

Financial Institutions Rule the Network, But Advanced Economies Dominate

One of the most revealing insights of the paper is the central role played by financial institutions. Around 80 percent of SWIFT cross-border payments by value are related to transactions between financial institutions, rather than consumer or business-initiated transfers. These payments are highly concentrated in advanced economies such as the United States, the United Kingdom, Germany, and France, as well as key financial centers like Hong Kong SAR and Switzerland. The U.S. dollar continues to dominate the system, accounting for over 50 percent of all transactions by value. The euro follows, while the Chinese renminbi has shown increasing adoption, especially in corridors not directly involving mainland China, indicating a broader offshore acceptance of the CNY. Still, the renminbi’s base remains modest, and its growth comes primarily via financial hubs like Hong Kong and London. Meanwhile, large-value transactions (those over $50 million) dominate financial institution flows, making up over 80 percent of their payment volume, and around 60 percent of customer payments. However, the vast majority of payment counts come from small-value transactions, especially among customers, where transfers under $10,000 are most common.

The Invisible Hands: Intermediaries, Currencies, and Network Centrality

The structure of the cross-border payment system is not just large, but deeply interconnected. Intermediaries, particularly banks in the U.S. and Germany, play an outsized role in rerouting payments. For financial institution flows, over 70 percent of transaction values are intermediated through third economies, compared to only 21 percent for customer transactions. The U.S. alone is the intermediary in over 40 percent of these flows, cementing its role as the global financial hub. Network analysis using Katz-Bonacich centrality metrics shows a classic core-periphery structure, with the U.S., U.K., France, and Germany occupying the innermost circles. Different currencies reveal different network architectures: for example, CNY payment networks are more dispersed, with Hong Kong and London playing central roles instead of the Chinese mainland. The SWIFT-based financial web is vast, with payment corridors crisscrossing the globe in patterns that closely align with trade, investment, and institutional history.

Trade, Investment, and Distance: What Actually Drives the Flows?

To explain why and where money flows, the researchers applied a gravity model, a staple of trade economics, using variables such as bilateral imports, foreign direct investment, portfolio holdings, and proximity. Their results confirm that deeper trade and investment relationships are strongly correlated with larger cross-border payment flows. Interestingly, customer-initiated payments are more influenced by trade, while financial institution flows correlate more closely with FDI and portfolio investment. Information frictions, such as geographic distance, language differences, and historical colonial ties, still matter, particularly in smaller payments, where trust, transparency, and familiarity play a more critical role. However, these frictions are nearly irrelevant in large-value transactions, where economic fundamentals, institutional trust, and global finance norms take precedence. The findings underscore the different dynamics at play depending on whether one is analyzing a $500 remittance or a $500 million securities transaction.

A Fragmenting World: The Geopolitics of Money Movement

Perhaps the most timely and politically charged part of the study is its focus on how geopolitical shifts are influencing the flow of money across borders. Using geopolitical risk indices and voting data from the United Nations General Assembly, the authors classify countries into U.S.-aligned, China-aligned, and non-aligned blocs. They find that rising fragmentation, whether in trade, financial linkages, or political alignment, is associated with a significant decline in cross-border payment values, especially for large financial institution flows between opposing blocs. For example, a one standard deviation rise in global fragmentation results in a 5.5 percent drop in cross-border flows between financial institutions. Yet, not all effects are uniform. While geopolitical uncertainty appears to increase U.S. dollar-denominated payments, reflecting its role as a safe haven, CNY payments in such situations tend to decline. Curiously, in some cases, fragmentation appears to boost cross-border use of alternative currencies like the euro or CNY, hinting at a slow but noticeable diversification away from the dollar in select corridors.