What defines an FX payment?

An FX payment, or foreign exchange payment, is characterized by the initiation of a payment in one currency that is intended for a recipient (beneficiary) in a different currency. This process involves converting the original currency into the currency of the beneficiary, which is the essence of foreign exchange transactions. The primary function of an FX payment is to facilitate international trade and investment by allowing parties from different countries to transact using their local currencies.

The other options do not accurately define an FX payment. Payments made in a single currency do not involve foreign exchange as there is no currency conversion. Similarly, payments that settle instantly could apply to various types of transactions and aren’t exclusively related to foreign exchange. Lastly, payments processed only by the central bank do not encompass the broader array of FX transactions that can involve commercial banks and other financial institutions, making them inconsistent with the definition of an FX payment.