Building on the FSB’s report published in April this year, the Committee on Payments and Market Infrastructures released its Stage 2 report. This report aims to identify the building blocks with which a roadmap for enhanced cross-border payments can be built.
The stage 1 assessment report identified the following as the key challenges and frictions to cross-border payments:
- Fragmented and truncated data formats.
- Complex processing of compliance checks.
- Limited operating hours.
- Legacy technology platforms.
- Long transaction chains.
- Funding costs.
- Weak competition.
This Stage 2 report identifies possible building blocks where further joint public and private sector work could enhance cross-border payments, and be used to support a global approach to addressing the above underlying frictions.
The Committee identify 19 building blocks :
- Develop common cross-border payments vision and targets.
- Implement international guidance and principles.
- Defined common features or cross-border payment service levels.
- Align regulatory, supervisory and oversight frameworks.
- Apply AML/CFT consistently and comprehensively.
- Review interaction between data frameworks and cross-border payments.
- Promote safe payment corridors.
- Foster KYC and identity information sharing.
- Facilitate increased adoption of PVP.
- Improve (direct) access to payment systems.
- Explore reciprocal liquidity arrangements.
- Extend and align operating hours.
- Pursue interlinking of payments systems.
- Adopt a harmonised version of ISO 20022 for message formats.
- Harmonise API protocols for data exchange.
- Establish unique identifiers with proxy registries.
- Consider the feasibility of new multilateral platforms and arrangements for cross-border payments.
- Foster the soundness of global stablecoins arrangements.
- Factor an international dimension into CBDC designs.
The FSB has welcomed the report, and has confirmed that its membership has expressed strong support for the approach of combining enhancements to current cross-border arrangements and infrastructure, with exploration of new ambitious possibilities.
The FSB also feel that enhancements in cross-border payments will take a combined effort of the public and private sectors, which they feel means commitments by the G20 will be extremely important in terms of coordination to achieve the desired vision.