CPMI published a report that sets out nineteen building blocks for a global roadmap to improve cross-border payments. The report highlights five focus areas that involve committing to a joint public- and private-sector vision; coordinating regulation, supervision, and oversight; improving existing payment infrastructures; enhancing data quality; and exploring the potential of new payment infrastructures. This report marks Stage 2 of a three-stage process initiated by the G20. In April 2020, FSB had published the Stage 1 report, which assessed existing cross-border payment arrangements and challenges. This Stage 2, CPMI report supports a global approach to addressing the underlying frictions identified in the Stage 1 report. As part of the Stage 3, FSB will publish the roadmap to enhance cross-border payments in October 2020.
The building blocks identified in the CPMI report are arranged into five focus areas, four of which seek to enhance the existing payments ecosystem, while one focus area covers emerging payment infrastructures and arrangements. Work on some of the building blocks in terms of focus areas is already underway in a number of jurisdictions, while with others it will take more time to assess implementation:
- Commit to a joint public and private sector vision to enhance cross-border payments. The building blocks in this focus area are intended to act as a commitment mechanism to drive a meaningful, coordinated change at the global level over a sustained period of time. A common vision and agreed targets can encourage a wide range of policymakers and market participants to work toward enhancing cross-border payments. Implementing international guidance and principles relevant for cross-border payments and defining common features of cross-border payment service levels will require sustained public- and private-sector commitment.
- Coordinate on regulatory, supervisory, and oversight frameworks. The building blocks in this focus area are intended to mitigate key challenges arising from the multi-jurisdictional nature of cross-border payments, by advancing consistent international rules and standards without compromising individual jurisdictional discretion or lowering standards.
- Improve existing payment infrastructures and arrangements to support the requirements of the cross-border payments market. The building blocks in this focus area center on technical and operational improvements to the existing domestic and international payment infrastructures that cross-border payments depend on.
- Increase data quality and straight through processing by enhancing data and market practices. The building blocks in this focus area aim to maximize the positive impact of the technical, operational, and regulatory process changes being advanced in the above-mentioned focus areas. Promoting the adoption of common message formats, including conversion and mapping from legacy formats and the use of Legal Entity Identifiers, directly mitigates the friction around fragmented and truncated data.
- Explore the potential role of new payment infrastructures and arrangements. The building blocks in this focus area are aimed at exploring the potential that new multilateral cross-border payment platforms and arrangements, central bank digital currencies, and global “stablecoins” could offer for enhancing cross-border payments.
The report also details a set of considerations that could support the work being done in Stage 3 on using building blocks to create a global roadmap to enhance cross-border payments. Extensive engagement with all relevant private- and public-sector stakeholders will be needed to make progress in enhancing cross-border payments. Important interdependencies between building blocks have been identified and these interdependencies will be assessed further to inform the Stage 3 roadmap and beyond. Early incremental benefits seem feasible from some building blocks, while the benefits from other building blocks are expected to be realized in the longer term. A comprehensive set of delivery milestones involving the public sector and the private sector, together with monitoring, is essential to ensure success. This report has been developed by the Cross-border Payments Task Force of CPMI and was delivered to the G20 Finance Ministers and Central Bank Governors ahead of their virtual meeting on July 18.
- Press Release
- Report (PDF)
- Technical Background Report (PDF)
- FSB Letter to G20
- FSB Stage 1 Report, April 2020
Keywords: International, Banking, Securities, PMI, Cross-Border Payments, G20, Roadmap, Stablecoins, Digital Currencies, CBDC, Fintech, CPMI
Previous ArticleSRB Announces Single Resolution Fund on Way to Reach Target
The European Banking Authority (EBA) has published the final templates, and the associated guidance, for collecting climate-related data for the one-off Fit-for-55 climate risk scenario analysis.
The European Banking Authority (EBA) recently published a report that recommends enhancements to the Pillar 1 framework, under the prudential rules, to capture environmental and social risks.
As a follow on from its prudential standard on the treatment of crypto-asset exposures, the Basel Committee on Banking Supervision (BCBS) proposed disclosure requirements for crypto-asset exposures of banks.
The Basel Committee on Banking Supervision (BCBS) and the European Banking Authority (EBA) have published results of the Basel III monitoring exercise.
The Prudential Regulation Authority (PRA) recently issued a few regulatory updates for banks, with the updated Basel implementation timelines being the key among them.
The U.S. Department of the Treasury has recently set out the principles for net-zero financing and investment.
The European Commission (EC) launched a stakeholder survey on the draft International Guiding Principles for organizations developing advanced artificial intelligence (AI) systems.
The finalization of the two sustainability disclosure standards—IFRS S1 and IFRS S2—is expected to be a significant step forward in the harmonization of sustainability disclosures worldwide.
Decentralized finance (DeFi) is expected to increase in prominence, finding traction in use cases such as lending, trading, and investing, without the intermediation of traditional financial institutions.
The Basel Committee on Banking Supervision (BCBS) published reports that assessed the overall implementation of the net stable funding ratio (NSFR) and the large exposures rules in the U.S.