Financial Stability Board Report on Global Enhancement of Cross-Border Payments
04/09/2020The Financial Stability Board has published a report addressed to the G20 on international cross-border payment arrangements, where the sender and recipient of funds are in different jurisdictions. The report forms the first stage of the G20’s three-stage process to develop a roadmap that will enable countries to enhance their cross-border payments systems. The second stage will see the Committee on Payments and Market Infrastructures set out the building blocks of a system to improve cross-border payments and is due to be submitted to the G20 in July 2020. The third stage will involve coordination between the FSB and CPMI, together with other international organizations, to compile a roadmap for implementing the improvements. A report on the full three-stage process is expected to be delivered to the G20 in October 2020.
The FSB’s Stage 1 report identifies existing challenges in cross-border payments systems, including high costs associated with payments, slow payments processing, limited access for those without bank accounts or from fragile states and a lack of transparency regarding factors such as costs, processing chains and payment status. The FSB has also specified key “frictions” in the cross-border payments system that contribute to these challenges, such as fragmented data formats that impede the validation of parties’ identities, uneven implementation of anti-money laundering and counter-terrorist financing regimes which complicate the validation of legitimate transactions, limited operating hours of the underlying infrastructures and legacy technology platforms that were designed for the earliest transition from paper to electronic systems.
In response to the challenges and frictions it has identified, the FSB also offers suggestions on the nature of the building blocks to be included in the CMPI’s report, which include improvements to the operational aspects of cross-border payment systems, a standardization of data and market practice (including increased overlaps in operating hours) and possible enhancements to legal, regulatory and oversight frameworks.
In February 2020, the FSB wrote to G20 Finance Ministers and Central Bank Governors outlining the key focus areas of the FSB’s work in 2020. It identified regulatory and supervisory responses to stablecoins as a particular priority, and one closely linked with cross-border payment systems, as digital tokens that aim to become payment substitutes may fill needs not met by existing cross-border payment systems. The FSB launched a separate consultation on global stablecoin arrangements in April 2020.
View the FSB's Report on enhancing cross-border payments.
View details of the FSB's consultation on global stablecoin arrangements.
View details of the FSB's 2020 focus areas.
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