A key difficulty in international banking is that, despite the existence of the U.S. Federal Reserve System and equivalent central (or reserve) banks in other countries such as Canada, France, Germany, India, Japan, Switzerland, and the United Kingdom, an equivalent central (or reserve) bank system for the world has never been established by the United Nations (UN). Banks around the world use a variety of techniques to settle payments, using strategic alliances, local arrangements, limited credits, loss-sharing arrangements, and collaterals in the form of U.S. Treasury notes. This invariably results in arbitrary delays of months and lost interest suffered by users engaged in international business. Furthermore, as the number of international transactions is multiplied, the weakness of the current method of batch-mode transaction processing, employed by the central banks of the world's nations, begins to magnify. Such weaknesses include the (1) increased vulnerability, i.e., stress on the payment system leading to financial crisis, of a single central bank; (2) arbitrary delays, associated with each transaction processing; and (3) the lack of efficient scalability of the current banking system. For the benefit of the world economy, in which every country is a bona fide participant, this research argues that it is imperative to create an international federal reserve banking system.
This section introduces the NOVAHID approach to achieve real-time banking at the international level. NOVAHID is organized as a hierarchical approach. It is assumed, for economic, cultural, and geopolitical...
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