One-Leg-Out Models for Cross-Border Payments

This technical report discusses One-Leg-Out (OLO) arrangements as a method to enhance cross-border payments by utilizing existing domestic instant payment systems. The report outlines how OLO models allow for one leg of a transaction to be settled instantly, improving speed, cost, and transparency without requiring new infrastructure. It aligns with the G20’s Roadmap for Enhancing Cross-border Payments, which aims to reduce costs and improve transaction efficiency by 2027. The report details various models being tested for payment system interoperability and emphasizes that OLO offers significant potential for immediate improvements. It explains the operational mechanics of OLO payments, where one leg is settled domestically and the other internationally, and highlights the benefits of local instant payment systems in reducing settlement times and costs. Furthermore, it addresses the challenges to widespread adoption of OLO models and the need for cooperation among financial institutions to realize their full potential in the global payments landscape.