FSB Reports on Progress of Roadmap to Enhance Cross-Border Payments
The Financial Stability Board (FSB) published a progress report on the first year of the G20 roadmap for enhancing cross-border payments. The progress report highlights that most of the milestones set by the roadmap for 2021 have been successfully completed or are close to finalization. The report confirms the next steps in the roadmap for 2022 and beyond, which comprise not only further analyses but the development of specific proposals for material improvements to existing as well as the development of new systems. It notes that a call for proposals for a set of harmonized application programming interfaces (APIs) or standards using the existing API protocols for cross-border payments is also expected to be launched soon.
The report highlights that one of the foundational steps taken in 2021 was a stocktake of existing international standards, principles, and guidance relevant to the safe and efficient performance of cross-border payments. The stocktake, to be published later in October 2021, has identified three policy areas that will be further explored. These policy areas are supervision of banks versus non-banks, transparency of information provided to end-users about payment transactions, and cyber or technology risk regulation. As a next step, a focused workstream will be launched to work with other standard-setting bodies to consider, by March 2022, how to address gaps or areas of further alignment (if any) in the area of supervision of banks and non-banks. FSB plans to explore with other standard-setting bodies how international standards, principles, and guidance relevant to cross-border payments, including those on cyber risk, affect the timely prevention and management of fraud in payments. FSB will also explore whether there is a need to evolve standards, or their implementation in this area, in light of the transition to real-time cross-border payments.
The report notes that a call for proposals for a set of harmonized application programming interfaces (APIs) or standards using the existing API protocols for cross-border payments is also expected to be launched soon. According to the report, an exploration of the scope for, and obstacles to develop, a global digital Unique Identifier for cross-border payments, and potentially other financial transactions, has been extended from December 2021 to October 2022. Financial Innovation Network of FSB has been conducting a wider analysis of developments in the use of Digital identifications in the financial sector. A series of early bilateral outreach calls took stock of the scope and obstacles for a global digital unique identifier, including the Legal Entity Identifier for legal entities. The report also mentions that the Committee on Payments and Market Infrastructures (CPMI), in collaboration with BIS Innovation Hub, IMF, and World Bank, will identify and analyze options for access to, and interlinking of, the central bank digital currencies (CBDCs) that could improve cross-border payments. FSB has also published quantitative global targets for addressing the challenges of cost, speed, transparency, and access faced by cross-border payments, along with the responses to consultation on the quantitative global targets. An implementation approach for monitoring progress toward the targets will be developed in 2022.
The report also mentions that the Financial Action Task Force (FATF), in collaboration with the Basel Committee on Banking Supervision (BCBS), is developing options to encourage further harmonization in anti-money laundering and terrorist financing (AML/CFT) requirements to help address challenges to cross-border payments. These options include proposals for the review of relevant FATF standards and the development of best practices or consolidated guidance on cross-border payments. The report notes that CPMI is also in the process of integrating the experience of liquidity bridges into a framework, which is expected to cover aspects such as reciprocal account opening and operational procedures.
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Keywords: International, Banking, Securities, Cross-Border Payments, G20, Roadmap, Digital Currencies, CBDC, Cyber Risk, AML/CFT, API, LEI, Regtech, API Standards, FSB
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