FSB Chair Calls For Cross-Border Payment Reforms

Andrew Bailey, who leads the risk watchdog, said in a speech Thursday (March 12) that governments need to move forward with reforms to their international and domestic payment systems or risk inefficiencies that could fragment the world financial landscape.

“We have some tough challenges ahead,” said Bailey, whose comments at an FSB payments summit were reported by Reuters.

He told the audience that progress has been achieved under a G20-backed roadmap on international payments but implementation was still uneven.

As Reuters noted, cross-border payments have faced criticism over their high costs and slower settlement times, especially when compared with domestic payment rails.

The FSB said in October that world governments were on track to fall short of a 2027 goal of reducing the average cost of cross-border retail payments to no more than 1% and for 75% of wholesale and for retail payments to be credited within one hour of being made.

“Despite a flurry of policy breakthroughs and technical milestones, the world’s payment systems remain fragmented, with persistent frictions that make transferring money across borders costly and slow,” PYMNTS wrote last year of the FSB review. “The ultimate verdict? Technology alone is unlikely to solve the problem. New payment networks are emerging, but interoperability remains elusive. Structural barriers, including legal, regulatory and supervisory bottlenecks, continue to slow implementation.”

During Thursday’s speech, Bailey announced work toward a 2027 review of FSB recommendations on data frameworks and supervision, the Reuters report added.

Reuters also pointed out that efforts to overhaul global payments are happening as the cryptocurrency sector is lobbying for more business-friendly regulation of stablecoins, which advocates say provide for faster, cheaper, cross-border transactions.

Regulators, however, have warned that these tokens could threaten financial stability, consumer protection and monetary sovereignty if not supervised properly, the report added.

Meanwhile, PYMNTS wrote last month that—even as global trade faces a period of volatility—the “global payment options supporting cross-border commerce have never been more advanced and innovative.”

While FinTechs have redefined speed and usability, opening up new corridors, pricing models and APIs, banks are re-configuring their global plumbing and modernizing the settlement, compliance and liquidity infrastructure that still upholds most international flows.

“The corporate strategies supporting today’s cross-border environment are becoming increasingly complex and sensitive,” the report added.

“Companies are expanding internationally not just to grow, but to diversify risk. Treasury teams care less about marginal fee reductions and more about predictability, or knowing when money will arrive, in what currency, and under which regulatory conditions.”