Cross-border payments have reached an ‘inflection point’

G20 roadmap update sets new out practical initiatives

The G20 roadmap for enhancing cross-border payments has undergone a radical overhaul. The Bank for International Settlements’ Committee on Payments and Market Infrastructures believes that the roadmap is at an inflection point and is moving into a new phase of pursuing practical implementation.

The 19 building blocks of the comprehensive approach that defined the roadmap’s first two years have been replaced by three interconnected themes: payments system interoperability and extension; legal, regulatory and supervisory frameworks; and cross-border data exchange and messaging standards.

Many of the original building blocks can be mapped to these three themes, but the update reflects a more focused, targeted approach to tackling the problems of high costs, low speed, insufficient transparency and lack of access. The new G20 roadmap has laid out concrete actions to be carried out over the next few years with the aim of achieving the quantitative targets agreed upon by the CPMI in 2021.

OMFIF held a roundtable to discuss these aims with Thomas Lammer, deputy head of the secretariat CPMI, Nasreen Quibria, senior director and head of cross-border policy engagement at Visa, and Saskia Devolder, strategic programme director for cross-border payments at Swift.

One of the CPMI’s main priorities in the roadmap is to promote fast payments systems that can be easily interlinked. The CPMI will establish a forum where central banks can share information and experiences on the process of upgrading their payment systems in an effort to ensure that new fast payments systems and central bank digital currencies are developed with the international dimension in mind.

The CPMI also plans to host a workshop to showcase existing interlinking arrangements, in the hope that the technical and operational prerequisites become widely known and incorporated into the development process for new systems.

The CPMI does not intend to do all the work itself. Partnerships with the private sector are an important part of the strategy for improving cross-border payments.

This is particularly in evidence with regard to the promotion of the ISO 20022 framework. While the framework has already been widely adopted for some types of payments, particularly those processed by Swift, there is more work required to extend it and develop a range of application programming interfaces to ensure that ISO 20022 payments are as accessible as possible to the broadest range of users.

To help with this, the CPMI and Payments Market Practice Group have established a joint task force, which is working to ensure that payments system operators and market practice industry groups align with the ISO 20022 harmonisation requirements on schedule.

Work also needs to be done to smooth some of the frictions in the patchwork of various know your customer, anti-money laundering and countering the financing of terrorism regulations in different jurisdictions. And payment providers face challenges in obtaining licences to operate across multiple jurisdictions. These frictions make it more difficult for providers to offer their services to as many users as possible, which reduces competition in the market and worsens outcomes for users. Fixing this is one of the actions prescribed by the roadmap.

The Financial Stability Board has set up a working group to develop recommendations to make the supervisory requirements for institutions providing cross-border services more consistent. This will be followed by standards-setting bodies adapting their guidance to conform to the FSB’s recommendations and a further period for national authorities to evaluate how to change their own frameworks.

Lewis McLellan is Editor of the Digital Monetary Institute, OMFIF.

Join Today

Connect with our membership team

Scroll to Top