Targets for addressing the four challenges of cross-border payments: Final report

13 October 2021 | PDF full text (618 KB)

The targets define the ambition of the work and create accountability for the improvements being sought under the Cross-Border Payments Roadmap.

Summary of document history

Summary of document history

The targets define the ambition of the work and create accountability for the improvements being sought under the Cross-Border Payments Roadmap.

This report sets out global quantitative targets for addressing the challenges of cost, speed, transparency and access faced by cross-border payments. They play an important role in defining the ambition of the work of the G20 Roadmap for Enhancing Cross-border Payments, creating accountability. They have benefited from responses to a public consultation launched in May 2021.

The FSB has developed the targets based on the following principles. The targets should:

  • be directly related to the challenges

  • provide a clear indication of the extent of progress

  • be appropriately ambitious

  • be able to be readily communicated

  • be meaningful to the wide range of stakeholders.

The targets are based on a consideration of the current payment landscape and publicly available data from multiple sources for the four challenges across three market segments: wholesale; retail (e.g. business-to-business (B2B)/ person-to-business (P2B)/ business-to-person (B2P)/ person-to-person (P2P)) payments (other than remittances); and (as a separate category from other P2P payments) remittances.

End-2027 has been set as the common target date across the individual targets, with the exception of the remittance cost target, where a 2030 date has already been set as a United Nations Sustainable Development Goal (UN SDG) and endorsed by the G20. Stakeholders who are able to pursue faster implementation are encouraged to do so.

The full table of targets is shown below.

The FSB has developed proposals for an implementation approach for monitoring progress towards the targets that set out, in outline form:

  • how targets will be measured and data sources and data gaps to be filled;

  • how progress toward meeting the targets will be monitored; and

  • the frequency of data collection and publication.

By October 2022, the FSB will provide a report to the G20 and the public with further details of the implementation approach for progress monitoring, and with Key Performance Indicators (KPIs) providing estimates of current performance of cross-border payments in order to provide a baseline against which future progress toward the targets can be monitored. The October 2022 date for the report has been chosen to allow time for the approach to be developed with input from external stakeholders.

The FSB will publish an interim report in June 2022 on progress in developing the implementation approach.

Table 1: Targets for the Cross-Border Payments Roadmap

Table 1: Targets for the Cross-Border Payments Roadmap

 

Report on Targets for Addressing the Four Challenges of Cross-Border Payments: Overview of the responses to the consultation

| PDF full text (216 KB)

Summary of document history

Summary of document history

On 31 May 2021, the FSB published, for public consultation, proposals for quantitative targets at the global level for addressing the challenges of cost, speed, transparency and access faced by cross-border payments. The FSB received 43 responses to the consultation, which ended on 16 July 2021, from payments industry participants and other stakeholders.  All non-confidential responses have been published on the FSB’s website.

This note summarises the comments raised in the public consultation, including to the specific questions set out in the consultation, and provides an overview of the changes made as a result.

FSB publishes targets for enhancing cross-border payments and progress under its Roadmap

Press enquiries:
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Ref: 24/2021

The Financial Stability Board (FSB) today published a progress report on the first year of the G20 Roadmap for Enhancing Cross-Border Payments, bringing together in one place the work under the wide-ranging, but interconnected, set of initiatives.

The FSB has also published today, as a key early action under the Roadmap, specific quantitative global targets for addressing the challenges of cost, speed, transparency and access faced by cross-border payments. These targets define the ambition of the work under the Roadmap and create accountability. The targets, which follow a public consultation launched in May, are small in number, simple, and focus on improvements in the end-user experience. An implementation approach for monitoring progress toward the targets will be developed in 2022.

Other work under the Roadmap in 2020-2021 has primarily focused on laying the foundational elements for future Roadmap actions, including stocktakes and analysis of both existing and emerging payments systems and arrangements. These stocktakes have covered diverse topics such as existing international standards and guidance, and national and regional data frameworks; operating hours of and access to payment systems; common elements of service level agreements/schemes; the use of payment-versus-payment mechanisms; the interlinking of payment systems; and CBDC design. This work will provide a strong basis and guide for the operational improvements to come.

Most of the milestones set by the Roadmap for 2021 have been successfully completed or are close to finalisation. The breadth of the work underway and the recognition of the importance of conducting sufficient external outreach has led some of the timelines to be extended. But the end-goals of the overall Roadmap remain firmly on track.

The Roadmap will not be achieved merely on paper through analyses and recommendations. The next stage of work in 2022 includes the development of specific proposals for material improvements of underlying systems and arrangements, as well as the development of new systems. This practical work involved will require global coordination and sustained political support. It will also require investment in systems, processes and technologies.

The report stresses that the success of this work will depend heavily on the commitment of public authorities and the private sector, working together. The public and private sector will therefore need to begin planning and budgeting for the needed enhancements very soon.

Notes to editors

The FSB published the G20 Roadmap for Enhancing Cross-border Payments in October 2020. The targets for addressing the four challenges of cross-border payments have benefitted from responses to a public consultation launched in May 2021. A summary of responses to the consultation and changes made in light of this have also been published today.

The FSB coordinates at the international level the work of national financial authorities and international standard-setting bodies and develops and promotes the implementation of effective regulatory, supervisory, and other financial sector policies in the interest of financial stability. It brings together national authorities responsible for financial stability in 24 countries and jurisdictions, international financial institutions, sector-specific international groupings of regulators and supervisors, and committees of central bank experts. The FSB also conducts outreach with approximately 70 other jurisdictions through its six Regional Consultative Groups.

The FSB is chaired by Randal K. Quarles, Governor and Vice Chair for Supervision, US Federal Reserve; its Vice Chair is Klaas Knot, President of De Nederlandsche Bank. The FSB Secretariat is located in Basel, Switzerland, and hosted by the Bank for International Settlements.

FSB Chair’s letter to G20 Finance Ministers and Central Bank Governors: October 2021

11 October 2021 | PDF full text (152 KB)

The FSB is sharpening its focus on the road ahead.

This letter from the FSB Chair, Randal K. Quarles, to G20 Finance Ministers and Central Bank Governors ahead of their meeting on 13 October focuses on two key areas of the FSB’s work on which the FSB has submitted reports to the upcoming G20 meeting:

Developing a more resilient NBFI sector

The letter notes that, following the market turmoil in March 2020, the FSB agreed on an ambitious multi-year workplan to enhance NBFI resilience.

A key priority of this workplan has been work to address vulnerabilities in money market funds (MMFs), conducted in collaboration with the International Organization of Securities Commission (IOSCO). The FSB has delivered to the G20 a final report with policy proposals to enhance money market fund resilience. FSB members are assessing, or will assess, MMF vulnerabilities in their jurisdiction and will address them using the framework and policy toolkit in the report, in line with their domestic legal frameworks. The FSB, working with IOSCO, will then take stock of progress made and assess the effectiveness of the measures taken. The FSB and IOSCO will also carry out further work, complementing MMF policy reforms, to enhance the functioning and resilience of short-term funding markets.

The letter also notes the considerable progress made on assessing vulnerabilities and identifying policy considerations in other areas within NBFI, including open-ended funds; the impact of margin calls; and the structure of core funding markets. The FSB will leverage insights from the analysis in these areas to develop a systemic risk perspective on NBFI and policies to address such risks. The FSB will submit to G20 Leaders later this month a full progress report on its work to enhance resilience of NBFI, including areas where continued focus is needed.

Addressing challenges in cross-border payments

The COVID Event has brought into even sharper focus the need to address the limitations of current arrangements for cross-border payments. Last year, the FSB delivered a roadmap to enhance cross-border payments, so they are faster, more inclusive, less expensive and more transparent. Taking forward work on the roadmap, the FSB is submitting to the G20:

The letter notes that the FSB will also be submitting its latest work on cyber incident reporting, which brings together cross-sectoral expertise to explore whether harmonisation in cyber reporting can be achieved and what additional work needs to be undertaken.

FSB Chair updates the G20 on enhancing resilience in non-bank financial intermediation and addressing challenges in cross-border payments

Press enquiries:
+41 61 280 8477
[email protected]
Ref: 23/2021

The Financial Stability Board (FSB) today published a letter from the FSB Chair, Randal K. Quarles, to G20 Finance Ministers and Central Bank Governors ahead of their meeting on 13 October. The letter focuses on two key areas of the FSB’s work on which the FSB has submitted reports to the upcoming G20 meeting.

Developing a more resilient non-bank financial intermediation (NBFI) sector

The letter notes that, following the market turmoil in March 2020, the FSB agreed on an ambitious multi-year workplan to enhance NBFI resilience.

A key priority of this workplan has been work to address vulnerabilities in money market funds (MMFs), conducted in collaboration with the International Organization of Securities Commission (IOSCO). The FSB has delivered to the G20 a final report with policy proposals to enhance money market fund resilience. FSB members are assessing, or will assess, MMF vulnerabilities in their jurisdiction and will address them using the framework and policy toolkit in the report, in line with their domestic legal frameworks. The FSB, working with IOSCO, will then take stock of progress made and assess the effectiveness of the measures taken. The FSB and IOSCO will also carry out further work, complementing MMF policy reforms, to enhance the functioning and resilience of short-term funding markets.

The letter also notes the considerable progress made on assessing vulnerabilities and identifying policy considerations in other areas within NBFI, including open-ended funds; the impact of margin calls; and the structure of core funding markets. The FSB will leverage insights from the analysis in these areas to develop a systemic risk perspective on NBFI and policies to address such risks. The FSB will submit to G20 Leaders later this month a full progress report on its work to enhance resilience of NBFI, including areas where continued focus is needed.

Addressing challenges in cross-border payments

The COVID Event has brought into even sharper focus the need to address the limitations of current arrangements for cross-border payments. Last year, the FSB delivered a roadmap to enhance cross-border payments, so they are faster, more inclusive, less expensive and more transparent. Taking forward work on the roadmap, the FSB is submitting to the G20:

The letter notes that the FSB will also be submitting its latest work on cyber incident reporting, which brings together cross-sectoral expertise to explore whether harmonisation in cyber reporting can be achieved and what additional work needs to be undertaken.

Notes to editors

The FSB coordinates at the international level the work of national financial authorities and international standard-setting bodies and develops and promotes the implementation of effective regulatory, supervisory, and other financial sector policies in the interest of financial stability. It brings together national authorities responsible for financial stability in 24 countries and jurisdictions, international financial institutions, sector-specific international groupings of regulators and supervisors, and committees of central bank experts. The FSB also conducts outreach with approximately 70 other jurisdictions through its six Regional Consultative Groups.

The FSB is chaired by Randal K. Quarles, Governor and Vice Chair for Supervision, US Federal Reserve; its Vice Chair is Klaas Knot, President of De Nederlandsche Bank. The FSB Secretariat is located in Basel, Switzerland, and hosted by the Bank for International Settlements.

Policy Proposals to Enhance Money Market Fund Fesilience: Final report

| PDF full text (1 MB)

Summary of document history

Summary of document history

The March 2020 market turmoil exposed vulnerabilities in MMFs that need to be addressed.

This report sets out policy proposals to enhance money market fund (MMF) resilience, including with respect to the appropriate structure of the sector and of underlying short-term funding markets. It reflects public feedback received on a consultative version of the report, which the FSB published in June 2021. The policy proposals form part of the FSB’s work programme on non-bank financial intermediation and are intended to inform jurisdiction-specific reforms and any necessary adjustments to the policy recommendations for MMFs issued by IOSCO. Enhancing MMF resilience will help address systemic risks and minimise the need for future extraordinary central bank interventions to support the sector.

MMFs are subject to two broad types of vulnerabilities that can be mutually reinforcing: they are susceptible to sudden and disruptive redemptions, and they may face challenges in selling assets, particularly under stressed conditions. The prevalence of these vulnerabilities in individual jurisdictions may depend on market structures, use and characteristics of MMFs.

The report considers the likely effects of a broad range of policy options to address these vulnerabilities, by examining how these options would affect the behaviour of MMF investors, fund managers and sponsors, as well as the options’ broader effects on short-term funding markets, including through impacts on the use of potential substitutes for MMFs. Policy options are grouped according to the main – though not necessarily the only – mechanism through which they aim to enhance MMF resilience.

The policy toolkit includes mechanisms to: impose on redeeming fund investors the cost of their redemptions; absorb credit losses; address regulatory thresholds that may give rise to cliff effects; and reduce liquidity transformation.

The report also includes considerations on how to prioritise options in the context of identified vulnerabilities; and how authorities can combine options to address all MMF vulnerabilities prevalent in their jurisdiction.

FSB members are assessing, or will assess, MMF vulnerabilities in their jurisdiction and will address them using the framework and policy toolkit in this report, in line with their domestic legal frameworks. The FSB recognises that individual jurisdictions need flexibility to tailor measures to their specific circumstances. At the same time, as shown by the experience of March 2020, there are important cross-border considerations to be kept in mind. International coordination and cooperation on implementing policy reforms is critical to mitigate spillovers and avoid regulatory arbitrage.

In addition, the FSB will, working with IOSCO, review progress made by member jurisdictions in adopting reforms to enhance MMF resilience. The review process involves a stocktake to be completed by the end of 2023 of the measures adopted by FSB member jurisdictions, including their evidence-based explanation of relevant MMF vulnerabilities and policy choices made. This stocktake will be followed up with an assessment of the effectiveness of these measures in addressing risks to financial stability by 2026.

IOSCO plans to revisit its 2012 Policy Recommendations for Money Market Funds in light of the framework and policy toolkit in this report.

Finally, in response to the feedback from the public consultation, the FSB and IOSCO intend to carry out follow-up work, complementing MMF policy reforms, to enhance the functioning and resilience of short-term funding markets.

FSB publishes final report with policy proposals to enhance money market fund resilience

Press enquiries:
+41 61 280 8477
[email protected]
Ref: 24/2021

The Financial Stability Board (FSB) today published its final report with policy proposals to enhance money market fund (MMF) resilience. The report, which was delivered to the G20, is a key deliverable for 2021 of the FSB’s work programme on non-bank financial intermediation. The policy proposals in the report aim to address systemic risks and minimise the need for future extraordinary central bank interventions to support the sector.

MMFs are subject to two broad types of vulnerabilities that can be mutually reinforcing: they are susceptible to sudden and disruptive redemptions, and they may face challenges in selling assets, particularly under stressed conditions. The prevalence of these vulnerabilities in individual jurisdictions may depend on market structures, use and characteristics of MMFs.

The report considers the likely effects of a broad range of policy options to address these vulnerabilities. Policy options are grouped according to the main mechanism through which they aim to enhance MMF resilience. The policy toolkit includes mechanisms to: impose on redeeming fund investors the cost of their redemptions; absorb credit losses; address regulatory thresholds that may give rise to cliff effects; and reduce liquidity transformation. The report includes considerations on how authorities can prioritise and combine these options.

In terms of next steps, FSB members are assessing, or will assess, MMF vulnerabilities in their jurisdiction and will address them using the framework and policy toolkit in this report, in line with their domestic legal frameworks. The FSB recognises that individual jurisdictions need flexibility to tailor measures to their specific circumstances. At the same time, as shown by the experience of March 2020, there are important cross-border considerations to be kept in mind. International coordination and cooperation on implementing policy reforms is critical to mitigate spillovers and avoid regulatory arbitrage.

The FSB will, working with the International Organization of Securities Commissions (IOSCO), review progress made by member jurisdictions in adopting reforms to enhance MMF resilience. The review process involves a stocktake by the end of 2023 of the measures adopted by FSB member jurisdictions, followed up with an assessment by 2026 of the effectiveness of these measures in addressing risks to financial stability.

IOSCO plans to revisit its Policy Recommendations for Money Market Funds in light of the framework and policy toolkit in this report. Moreover, in response to the feedback from the public consultation, the FSB and IOSCO intend to carry out follow-up work, complementing MMF policy reforms, to enhance the functioning and resilience of short-term funding markets.

Notes to editors

The FSB published in November 2020 a Holistic Review of the March Market Turmoil, which lays out a comprehensive and ambitious work programme for strengthening the resilience of the NBFI sector while preserving its benefits.

The final report with policy proposals to enhance MMF resilience reflects public feedback received on a consultative version of the report, which the FSB published in June 2021. The FSB also published today an overview of the responses to its public consultation.

The FSB coordinates at the international level the work of national financial authorities and international standard-setting bodies and develops and promotes the implementation of effective regulatory, supervisory, and other financial sector policies in the interest of financial stability. It brings together national authorities responsible for financial stability in 24 countries and jurisdictions, international financial institutions, sector-specific international groupings of regulators and supervisors, and committees of central bank experts. The FSB also conducts outreach with approximately 70 other jurisdictions through its six Regional Consultative Groups.

The FSB is chaired by Randal K. Quarles, Governor and Vice Chair for Supervision, US Federal Reserve; its Vice Chair is Klaas Knot, President of De Nederlandsche Bank. The FSB Secretariat is located in Basel, Switzerland, and hosted by the Bank for International Settlements.

Policy proposals to enhance money market fund resilience

View the Standard

Money market funds (MMFs) are subject to two broad types of vulnerabilities that can be mutually reinforcing: they are susceptible to sudden and disruptive redemptions, and they may face challenges in selling assets, particularly under stressed conditions.

The report considers the likely effects of a broad range of policy options to address these vulnerabilities. Policy options are grouped according to the main mechanism through which they aim to enhance MMF resilience. The policy toolkit includes mechanisms to: impose on redeeming fund investors the cost of their redemptions; absorb credit losses; address regulatory thresholds that may give rise to cliff effects; and reduce liquidity transformation. The report includes considerations on how authorities can prioritise and combine these options.

Policy proposals to enhance money market fund resilience: Overview of the responses to the consultation

8 October 2021 | PDF full text (136 KB)

Summary of document history

Summary of document history

The consultation report with policy proposals to enhance MMF resilience was published on 30 June 2021 and the comment period closed on 16 August. The FSB received responses from various stakeholders, the large majority of which came from fund managers and their trade associations (mainly in the US and Europe). The remaining responses came from banks or banking associations, and from other trade associations and think tanks. All non-confidential responses have been published on the FSB’s website.

In addition, the FSB organised a virtual public workshop on 12 July to gather further feedback on the consultation report. Over 250 people attended the workshop, and a recording of the event is available on the FSB website.

This document summarises the comments raised in the public consultation and sets out the main changes made to the final report in order to address them.

FSB and IMF publish the 2021 Progress Report on the G20 Data Gaps Initiative

Ref no: 22/2021

The Financial Stability Board (FSB) and International Monetary Fund (IMF) today published the Sixth Progress Report – Countdown to December 2021 on the implementation of the Second Phase of the G20 Data Gaps Initiative (DGI-2).

2021 marks the final year of the second phase of the Data Gaps Initiative (DGI-2), and the twelfth year since the G20 Finance Ministers and Central Bank Governors endorsed the twenty recommendations made by IMF staff and the FSB Secretariat to address the data gaps identified during the Global Financial Crisis of 2007-08.

The report highlights that:

  • Significant progress has been achieved in closing identified policy-relevant data gaps during phases 1 and 2 of the Data Gaps Initiative.

  • The initiative has proved its value during the crisis triggered by the COVID-19 pandemic, helping policymakers to access key information in order to assess developments and risks in the financial and nonfinancial sectors, as well as to analyse interconnectedness and cross-border spillovers.

  • The pandemic continues to affect the DGI-2 work program. Given the limited time available, it is very likely that some recommendations will not be fully completed by the end of 2021. In particular, challenges are observed in: securities financing transaction data; institutional sectoral accounts; household distributional information; data on general government debt and operations; and commercial property price indices.

  • Nevertheless, participating economies continue to take forward the agreed DGI-2 recommendations, building on the collaboration and peer pressure mechanism. Participating economies and international organisations also recognise the need for a new international cooperation initiative on data gaps after the conclusion of the DGI at the end of 2021.

  • Building on the DGI process, the new initiative will focus on priorities of policy makers and avoid duplication with other existing initiatives. Four main statistical and data priorities to be covered by a possible new DGI have been identified: (i) climate change; (ii) household distributional information; (iii) fintech and financial inclusion data; and (iv) access to private sources of data and administrative data, and data sharing. A detailed workplan for the new initiative will be developed.

Notes to editors

In October 2009, the FSB and IMF published The Financial Crisis and Information Gaps, a report which responded to a request from the G20 Ministers and Governors to explore information gaps and provide appropriate proposals for strengthening data collection. The report, which set out a series of recommendations to address identified data gaps, was endorsed by G20 Ministers and Governors and led to the first phase of work (DGI-1). In September 2015, it was agreed that the DGI work should continue into a second phase (DGI-2).

The main objective of DGI-2 is to implement the regular collection and dissemination of reliable and timely statistics for policy use. DGI-2 also includes new recommendations to reflect evolving policymaker needs. Its twenty recommendations are clustered under three main headings: (i) monitoring risk in the financial sector; (ii) vulnerabilities, interconnections and spillovers; and (iii) data sharing and communication of official statistics. DGI-2 maintains continuity with the DGI-1 recommendations while setting more specific objectives for G20 economies to compile and disseminate minimum common datasets for these recommendations.

The member agencies of the Inter-Agency Group on Economic and Financial Statistics (IAG) are the Bank for International Settlements, European Central Bank, Eurostat, IMF (Chair), Organisation for Economic Co-operation and Development, United Nations and the World Bank. The FSB participates in the IAG meetings.

Press enquiries:
FSB: +41 61 280 8477, [email protected]
IMF: +1 202 623 4277, [email protected]