Members of Mercator Advisory Group’s CEP advisory service will be familiar with our frequent coverage of cross-border payments (x border), as evidenced by a recent Viewpoint on the subject of B2B x border. The space is a hotbed of innovation as fintechs, banks, central banks, networks, associations, and government entities look for ways to make the experience faster, safer, and more visible, including various cryptocurrency efforts.
This posting in Global Government Forum discusses a report released by the Bank for International Settlements (BIS), the second of three publications drawn up in response to a request from the G20 to the BIS’s Financial Stability Board for some sort of action plan on x border.
‘It can take up to 10 days for a cross-border payment to be completed and cost up to 10 times as much as a domestic payment, CPMI chairman Sir Jon Cunliffe said. Cunliffe, who is the Bank of England’s deputy governor, said cross-border payments are necessarily more complex than domestic payments, but “we need to bring them into line with the standards, efficiency and reliability that users now have a right to expect”. ‘
The BIS has a group called the Committee on Payments and Market Infrastructures (CPMI), and this second installment lays out 19 “building blocks for a global roadmap” for improving x border. That’s a lot of blocks and gives one a sense of the complications involved in changing the experience. We reviewed the 11 page cover report but have not yet delved into the accompanying 60 page technical supporting doc. The G20 got involved essentially as a check on Facebook’s Libra (and other cryptocurrencies), since the world was moving a bit too quickly and a knowledge gap existed. The Libra project has been scaled back a bit. So this is an effort to develop some sort of regulatory construct across large economies.
‘The FSB’s first report, which assessed current cross-border payment arrangements and outlined the challenges, was published in April. The third publication is scheduled for October.…“Faster, cheaper, more transparent and more inclusive cross-border payment services would have widespread benefits for citizens and businesses worldwide, supporting economic growth, international trade, global development and financial inclusion,” said Cunliffe, who added that “if anything, [central banks’] role is more important in view of accelerating digital innovation and the challenges posed by the pandemic.” ‘
Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group