Interoperable Value Exchange System for Cross-Region Settlement
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Solution Overview
Problem
Conventional transaction systems require sending and receiving entities to hold multiple value types, including an intermediate type, to facilitate transactions across different regions, leading to increased computational resources and storage needs, as well as limited flexibility in applying exchange rates.
Innovation Solution
An exchange system that receives exchange rates from an exchange rate computer, provides these rates or derivatives to a clearing and settlement system, and transmits exchange requests to correspondent entity computers, allowing for the settlement of transactions in foreign currencies without the need for entities to hold large amounts of intermediate or destination currencies.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Adaptability or versatility
If entities hold multiple value types including intermediate type to facilitate transactions across different regions, then transaction capability is improved, but computational resources and storage needs increase
Solution Approach 1:
The patent extracts the intermediate value type holding requirement from the entity computers and relocates it to the network computer. The network computer now maintains the intermediate value type (second type value) in its own account, while entity computers only need to hold their native value types (first type and third type values). This extraction eliminates the need for entity computers to maintain multiple value types, reducing their computational and storage burdens while preserving cross-region transaction capability.
Solution Approach 2:
The network computer acts as an intermediary that holds and manages the intermediate value type. When a transaction occurs between entities using different value types, the network computer facilitates the conversion by holding the intermediate type in its own account, performing the necessary value type conversions, and settling transactions between the sending and receiving entity computers. This intermediary approach allows entity computers to operate with simplified value type requirements.
2Stability of the object's composition
If exchange rates are set at relatively long time intervals, then system stability is improved, but transaction flexibility decreases
Solution Approach 1:
The patent implements dynamic exchange rate adjustment by allowing the network computer to update exchange rates between different value types in real-time or near-real-time based on current market conditions. The system can apply different exchange rates to different transactions or groups of transactions, enabling flexible rate adjustments without requiring lengthy settlement periods. This dynamic approach maintains stability through systematic rate management while providing the flexibility to adapt to changing market conditions.
Solution Approach 2:
The system employs periodic exchange rate updates at optimized intervals, allowing rates to be adjusted more frequently than in conventional systems but still maintaining stability through structured update cycles. The network computer can perform multiple rate adjustments throughout the day, enabling different rates to be applied to different transaction batches while avoiding the instability of continuous, unstructured rate changes.
3Reliability
If entities hold sufficient intermediate type value to cover future transaction settlements, then settlement reliability is improved, but storage requirements increase
Solution Approach 1:
The patent extracts the intermediate value type storage requirement from entity computers and consolidates it at the network computer. The network computer maintains an account holding the intermediate value type (second type value) sufficient to cover future transaction settlements, while entity computers only need to hold their native value types. This extraction dramatically reduces the total storage requirements across the system while maintaining settlement reliability through centralized value management.
Solution Approach 2:
The patent merges the intermediate value type holding function into a single centralized location (the network computer) rather than requiring each entity computer to maintain separate holdings. The network computer consolidates the intermediate value type in its own account and uses this centralized pool to facilitate conversions and settlements across multiple transactions. This merging reduces redundant storage across the system while ensuring sufficient liquidity for future settlements.
Data Source
AI summary
A method includes receiving, from an exchange rate computer, a rate for exchange between a first value type and a second value type, providing, to a clearing and settlement system, the rate or a derivative thereof, and receiving a trade sum from the clearing and settlement system. The trade sum corresponds to an expected settlement amount for a plurality of transactions in which receivers in the transactions receive values of the second value type. At least some of the transactions utilize the rate or a derivative thereof. The method also includes transmitting, to a correspondent entity computer, an exchange request to exchange an amount of value from the first value type to the second value type. The amount of value is based on the trade sum. The clearing and settlement system initiates a transfer message to the correspondent entity computer to transfer the value of the second value type.