NOVAHID: a novel architecture for asynchronous, hierarchical, international, distributed, real-time payments processing

The development of the North American Free Trade Agreement (NAFTA), the European Economic Community (EEC), and the collapse of the former communist countries, has caused a urry of international banking, trading and investment activities in the recent years. However, the problem with international banking is that, despite the existence of the US Federal Reserve System, following the Federal Reserve Act in 1913, and equivalent central (or reserve) banks in other countries such (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, utilizing strategic alliances, local arrangements, limited credits, loss-sharing arrangements, and collaterals in the form of US Treasury Notes. This invariably results in arbitrary delays of often months and lost interest, suuered by users engaged in international business. Furthermore, as the number of international transactions multiply, the weakness of the current method of batch-mode transaction processing, employed by the central banks of the world's nations, begin to magnify. Such weaknesses include the (i) increased vulnerability, i.e. stress on the payment system leading to nancial crisis, of a single central bank, (ii) arbitrary delays, associated with each transaction processing, and (iii) the lack of eecient scalability of the current banking system. For the beneet of the world economy in which every country is a bonaade participant, this paper argues that it is imperative to create an international federal reserve banking system. This paper introduces a novel architecture for asynchronous, hierarchical, international, geographically distributed, real-time banking, NOVAHID. NOVAHID is organized as a hierarchical approach. This paper assumes that, for economic, cultural, and geo-political reasons, the world's nations may be organized into unique and autonomous entities, termed groups. The lower level of the hierarchy consists of discrete \group-networks" where each group-network is synthesized from the equivalent Federal Reserve banking nodes of the nations served by the group-network. At the highest level of the hierarchy, representative entities of the groups are interconnected through a \top-level-network." The speed of local transaction processing, i.e. within a group-network, is likely to be much faster than the processing of international transactions that involve two group-networks and the top-level-network. The hierarchy reeects the underlying assumption that a signiicant fraction of all transactions are local to the group-networks and a relatively smaller fraction of all transactions transcend group boundaries. At its core, NOVAHID utilizes the principles of YADDES which embodies the …