The Bank for International Settlements’ Committee on Payments and Market Infrastructures recently published a report to the G-20 detailing building blocks necessary to enhance cross-border payments. The report groups nineteen specific building blocks into five categories: “public-private cooperation, coordination of regulatory and supervisory oversight, addressing existing payment infrastructures, enhancing data and market practices, and factoring in new and developing payment infrastructures.”
The report represents stage two of the three stage process to develop a global roadmap for enhancing cross-border payments. The first phase of the project was published in April 2020. It outlined the current challenges facing cross-border payments, which include high costs, low speeds, limited access, and insufficient transparency.
According to the stage two report, in most cases, cross-border payments require more parties, jurisdictions, time zones, and regulations than purely domestic payments. To address these issues, the stage two report outlines areas the G-20 should focus on, including harmonizing data protocols and addressing planned new payment infrastructures such as central bank digital currencies.
The report was accompanied by a letter from Randal K. Quarles, the Financial Stability Board chair and vice chair for supervision at the Federal Reserve System Board of Governors, which provided that enhancing cross-border payments will require efforts from both public and private sector stakeholders.
Phase three of the cross-border payments initiative is planned for publication in October, which will contain a roadmap that implements an updated framework for international payments.