What are Intermediaries

The rapid rise of globalization has necessitated the transfer of large sums money, securities, and other assets in order to keep the world’s economic engines functioning smoothly. Sometimes these transactions amount to hundreds of millions of dollars, which is why guarantees of safety and security must exist for all parties involved. That is, the party initiating the transfer must be able to ensure that their funds make it to the end customer, and the end customer must be able to ensure that the funds will be received quickly, safely, and paid in full.

In order to provide this level of trust, many parties initiating such a transaction choose to go through an intermediary, or an institution that conducts the transaction on behalf of both parties. This provides the safety of a guarantee by utilizing a neutral third party, unfettered by outside events and political struggles. In short, intermediaries provide security to the end customers of a transaction that their assets will be kept safe. Intermediaries are often used by central banks on the behalf of governments or government institutions, or large banks limited by the lack of offices or correspondent banks in a receiving country.

Intermediaries help to move assets around the world, serving as the lifeblood of our worldwide markets. Without their services, world trade and economic recovery would be greatly impeded as the absence of a neutral facilitator would erect barriers to credit for businesses, consumers, and markets. Without the trust that intermediaries provide, central banks, governments, and other users looking to transfer large sums would, by necessity, be forced to either hold back their lending or conduct transactions in a more inefficient and unsafe manner.