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The Financial Stability Board (FSB) has published a new report setting out its priority actions for achieving the G20 targets on enhancing cross-border payments, and has called on further input from industry leaders.
The report, which has been delivered to G20 finance ministers and central bank governors, focuses on required actions in three priority areas that will contribute to the end goals of the roadmap by 2027.
The three priority areas include: organising payment system interoperability and extension; finalising legal, regulatory and supervisory frameworks; and harmonising cross-border data exchange and messaging standards.
The G20 finance ministers and central bank governors, who met on February 24-25, discussed these priority areas in light of the first two years of activity since the roadmap was launched in late 2020.
On payment system interoperability and extension, the report calls on members to work together to extend their real-time gross settlement (RTGS) system operating hours and introduce access policies that improve payment system interoperability.
By interlinking payment systems, banks and other payment service providers (PSPs) could transact with each other without requiring them to use intermediaries or to participate in the same payment system.
Actions in pursuit of these goals include convening a forum for central banks to exchange practices, fostering instant payment linkages across borders, and finalising requirements for cross-border payment service level agreements.
In the legal, regulatory and supervisory framework area, the report calls on banks, non-banks and standard-setting bodies (SSBs) to promote an “efficient environment” for cross-border payments, while maintaining their safety, security and integrity.
This would include harmonising regulations in line with FSB recommendations, enhancing Financial Action Task Force (FATF) rules on wire transfers and increasing information provided to end users.
It also includes improving the consistency of bank and non-bank regulation and supervision, updating anti-money laundering and counter-terrorism financing (AML/CTF) rules, implementing the FATF Travel Rule and exploring the use of technology in AML/CTF.
Finally, the report calls on stakeholders to facilitate cross-border data exchange and to increase the use of standardised messaging formats for cross-border payments.
Such actions include enhancing the interaction between data frameworks and cross-border payments, finalising ISO 20022 harmonisation requirements and promoting real-world implementation, improving API harmonisation for cross-border payments use and exploring enhanced use of the legal entity identifier (LEI) in cross-border payments.
Calling on industry leaders
The FSB notes that to successfully implement these changes will require wider collaboration between industry and policymakers.
To facilitate this, the FSB and the Bank for International Settlements (BIS) Committee on Payments and Market Infrastructures (CPMI) will convene two industry task forces.
These task forces will work towards ensuring that each of the actions in the priority areas is completed in their allotted time.
The first task force, known as the legal, regulatory and supervisory (LRS) taskforce, will be composed of senior representatives of payments firms and industry associations.
These organisations are invited to nominate representatives to sit on the task force, and nominations will be adjudicated by the FSB.
The goal of the LRS taskforce is to strengthen private-sector participation in advancing the G20 Roadmap for Enhancing Cross-Border Payments.
It will aim to provide input and feedback on frictions in legal, regulatory or supervisory frameworks related to the provision of cross-border payments and relevant data-related frameworks.
Such issues could include differences between standards that relate to cross-border payments or their regulatory implementation and differences in data frameworks that contribute to challenges faced by cross-border payments providers.
The task force will then offer analysis of potential areas for action that could address the identified frictions.
The FSB notes that private-sector nominees for the LRS taskforce should be senior managers with significant experience and direct responsibilities related to cross-border payments in the areas of compliance, legal, cross-border operations or risk management.
Nominees should be able to commit sufficient time and organise resources from within their organisation to support the work of the taskforce until at least the end of 2024.
The LRS taskforce will have about 30 members and will comprise 20 private-sector representatives and ten public-sector representatives.
It will be chaired by one or more senior public-sector representatives and will also include senior public-sector representatives involved in regulation or supervision.
The taskforce will meet virtually and at least on a quarterly basis, and it will cover a wide variety of jurisdictions, regions, private-sector institutional types and business models. Nominations for the LRS taskforce are open until March 10.
Technical task force launch
Separately, the BIS CPMI is inviting nominations for a second task force focused on technical issues related to cross-border payments interoperability and extension (PIE).
The PIE task force will work on improving access to payment systems, extending their operating hours and interlinking them across borders.
The CPMI said it welcomes nominations from banks, non-bank PSPs and market infrastructure providers that participate, or plan to participate, in the cross-border payments market and industry associations.
Nominees should have significant experience and direct responsibilities related to operational cross-border payments, product development, business models, standards, interoperability technologies and/or policy issues.
Nominees should be able to commit sufficient time and organise resources from within their organisation to support the work of the task force until at least the end of 2024.
Like the LRS take force, the PIE task force will comprise about 30 members from a wide variety of jurisdictions and regions.
