Featured Product

    International Regulators Increase Focus on Cross-Border Payments Work

    December 10, 2021

    The Bank for International Settlements (BIS) announced the success of cross-border wholesale central bank digital currency (CBDC) experiment while the Committee on Payments and Market Infrastructures (CPMI) called for managers of payment service level agreements and schemes to join cross-border payments task force. A recently published short BIS Bulletin on the interoperability between payment systems across borders also notes that the BIS Innovation Hub is putting theory into practice with several innovative projects to foster interoperability across the four stylized models. In addition, the Financial Stability Board (FSB) announced that it is seeking feedback on how existing national and regional data frameworks affect cross-border data flows and that it is appointing Lael Brainard, a Governor of the U.S. Federal Reserve Board (FED), as Chair of the FSB Standing Committee on Assessment of Vulnerabilities (SCAV).

    The following are the key highlights of these recent developments in the area of cross-border payments system:

    • The recently completed Project Jura, by BIS, the Bank of France, and the Swiss National Bank showed that CBDCs can be used effectively for international settlements between financial institutions. The Project was conducted in collaboration with a group of private sector firms (comprising Accenture, Credit Suisse, Natixis, R3, SIX Digital Exchange and UBS) and explored settlement of tokenized euro commercial paper and foreign exchange transactions. Tests were conducted in a near real-life setting and met current regulatory requirements. Issuing wholesale CBDCs on a third-party platform and giving regulated non-resident financial institutions direct access to central bank money raises intricate policy issues. Jura explored a new approach, including subnetworks and dual-notary signing, which may give central banks comfort to issue wholesale CBDCs on third-party platforms and to provide regulated non-resident financial institutions with access to wholesale CBDCs. Also published was a full report on the experiment on cross-border settlement using wholesale CBDC.
    • In the Bulletin on interoperability of cross-border payment systems, BIS notes that the interoperability among payment systems is the foundation for enhancing cross-border payments and it requires technical, semantic, and business system compatibility so that end-users can seamlessly transact with each other across systems. Public- and private-sector options in pursuing cross-border payment system interoperability can be illustrated using four stylized models, ordered in increasing complexity and cost but also greater efficiency: a single access point, bilateral link, hub and spoke, or a common platform. The BIS Innovation Hub is putting theory into practice with several innovative projects to foster interoperability across the four stylized models. An ambitious, multi-year G20 program to enhance cross-border payments is underway.
    • CPMI is planning to set up a taskforce on defining common features of cross-border payment service levels and is inviting nominations for taskforce from managers of service level agreements, or SLAs, and payment schemes. Expressions of interest in the taskforce should be expressed by January 14, 2022. Starting in early 2022, the taskforce will meet every six to eight weeks and its findings will feed into the development of a service level template that stakeholders can use as a starting point when establishing agreements. These agreed service levels will establish consistency and certainty for all cross-border payment stakeholders based on a common framework. These service levels can be defined in the form of service level agreements or payment schemes. 
    • FSB is conducting a survey as part of its work under Building Block 6 of the roadmap for enhancing Cross-border Payments, wherein FSB agreed to conduct a stocktake of existing national and regional data frameworks relevant to the functioning, regulation, and supervision of cross-border payment arrangements and to identify issues related to cross-border use of those data by national authorities and by the private sector. The aim is to better understand the requirements applicable to data—for example, where and what data must be stored/retained, where it may be transferred, the rules governing the security or access to data, could affect (either enabling or impeding) cross-border payments, by potentially affecting cost, speed, access, security of cross-border payments, or interoperability of cross-border payment networks. Stakeholder views are also requested on any potential frictions and on which policies are most effective. Data Frameworks within scope include domestic data frameworks, the implementation of international standards from FSB and other standard-setting bodies, and the other international efforts, arrangements, or agreements that jurisdictions may implement in their domestic data frameworks or that may affect cross-border data flows. The survey closes on January 14, 2022.
    • FSB appointed a U.S. FED Governor Lael Brainard as Chair of the Standing Committee on Assessment of Vulnerabilities (SCAV), which monitors and assesses vulnerabilities in the global financial system and proposes, to the FSB, the Plenary actions needed to address these vulnerabilities. Lael Brainard succeeded Klaas Knot, President of De Nederlandsche Bank, who served as Chair of the Committee since September 2016 and who became the FSB Chair on December 02, 2021. Ms. Brainard’s appointment is for a two-year term, renewable once. Mr. Knot said “The assessment of vulnerabilities in the global financial system is a core mandate of the FSB and Lael’s deep understanding of financial stability issues makes her the ideal candidate to lead the SCAV.”

     

    Related Links

    Keywords: International, Banking, Cross-Border Payments, CBDC, Project Jura, SLA, Third-Party Risk, G20 Reforms, G20, Taskforce, Payments Data, SCAV, BIS Innovation Hub, BDF, SNB, BIS, CPMI, FSB

    Related Articles
    News

    EU Agencies Update LCR Rule and Macro-Prudential Policy Recommendation

    The European Commission (EC) published the Delegated Regulation 2022/786 with regard to the liquidity coverage requirements for credit institutions under the Capital Requirements Regulation (CRR).

    May 23, 2022 WebPage Regulatory News
    News

    EBA Publishes Regulatory Standards to Identify Shadow Banking Entities

    The European Banking Authority (EBA) published the final draft regulatory technical standards specifying the criteria to identify shadow banking entities for the purposes of reporting large exposures.

    May 23, 2022 WebPage Regulatory News
    News

    EIOPA Examines Physical Climate Risk Exposure, SII Non-Compliance

    The European Insurance and Occupational Pensions Authority (EIOPA) published a report assessing insurers' exposure to physical climate change risks

    May 20, 2022 WebPage Regulatory News
    News

    EC Publishes Results on Review of Web Accessibility Directive

    The European Commission (EC) published the results of a public consultation, held in October 2021, on the review of the Web Accessibility Directive.

    May 19, 2022 WebPage Regulatory News
    News

    NGFS Report Explores Quantification of Climate Risk Differentials

    The Network for Greening the Financial System (NGFS) published two reports to aid central banks and regulators in their oversight of the financial sector and in their central bank operations

    May 19, 2022 WebPage Regulatory News
    News

    MAS Consults on Adjustment Spreads for Conversion of SOR Contracts

    The Monetary Authority of Singapore (MAS) and the SC-STS are jointly consulting, until June 10, 2022, on setting adjustment spreads for the conversion of legacy SOR contracts to SORA reference rate.

    May 18, 2022 WebPage Regulatory News
    News

    OSFI Discusses Benchmark Rate Transition, Sets Out Work Priorities

    The Office of the Superintendent of Financial Institutions (OSFI) published the strategic plan for 2022-2025 and the departmental plan for 2022-23.

    May 17, 2022 WebPage Regulatory News
    News

    EBA Proposes Standards to Support Secondary NPL Markets

    The European Banking Authority (EBA) is consulting, until August 31, 2022, on the draft implementing technical standards specifying requirements for the information that sellers of non-performing loans (NPLs) shall provide to prospective buyers.

    May 17, 2022 WebPage Regulatory News
    News

    EU Confirms Agreement on Rules on Cybersecurity and Banking Resolution

    The European Council and the Parliament reached an agreement on the revised Directive on security of network and information systems (NIS2 Directive).

    May 13, 2022 WebPage Regulatory News
    News

    EBA Issues Standards for Crowdfunding Service Providers Under ECSPR

    The European Banking Authority (EBA) published the final draft regulatory technical standards specifying information that crowdfunding service providers shall provide to investors on the calculation of credit scores and prices of crowdfunding offers.

    May 13, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8206