Abstract
As of January 2024, the global financial landscape is undergoing a significant transformation driven by the integration of Distributed Ledger Technology (DLT) into cross-border payment infrastructures. Traditional correspondent banking models have long been criticized for their high costs, slow settlement times, and lack of transparency. This research investigates the efficiency and security implications of DLT-based systems compared to legacy financial rails. Utilizing a multi-dimensional comparative framework, the study synthesizes data from recent central bank experiments and private sector pilots to evaluate transaction latency, cost structures, and resilience against cyber threats. The methodology involves a systematic analysis of throughput capacities and cryptographic security protocols inherent in various DLT architectures, including permissioned and permissionless systems. Our results indicate that DLT can reduce cross-border settlement times from several days to near real-time, while simultaneously lowering transaction costs by up to 40% through the elimination of intermediate layers. However, the study also identifies critical security challenges, such as smart contract vulnerabilities and the '51% attack' risk in decentralized networks, alongside significant regulatory hurdles. The findings suggest that while DLT offers a robust alternative to current systems, achieving global scalability requires standardized interoperability protocols and a harmonized regulatory approach. This research contributes to the ongoing discourse on financial engineering by providing a rigorous assessment of DLT’s potential to redefine international value transfer, aligning with the G20's roadmap for enhancing cross-border payments.