Building blocks for a roadmap to enhance cross-border payments: letter to the G20

13 July 2020 | PDF full text (111 KB)

This letter from the FSB Chair, Randal K. Quarles, to the G20, accompanied a report setting out building blocks for a roadmap to enhance cross-border payments. The report, by the Committee on Payments and Market Infrastructures (CPMI), was welcomed by the FSB. The CPMI report sets out the necessary elements to address problems with the high costs, low speed, limited access and insufficient transparency of cross-border payments, highlighted by an FSB report published in April.

The publication of the CPMI report marks the second of a three-stage process, coordinated by the FSB at the request of the G20, to develop a roadmap to enhance cross-border payments. The report was delivered to G20 Finance Ministers and Central Bank Governors ahead of their virtual meeting on 18 July.

The G20 at is February 2020 Finance Ministers and Central Bank Governors meeting asked the FSB to coordinate a three-stage process to develop a roadmap to enhance cross-border payments:

  • Assessment (Stage 1): In its April report the FSB, in coordination with relevant international organisations and standard-setting bodies assessed existing arrangements and challenges.
  • Building Blocks (Stage 2): The Committee on Payments and Market Infrastructures (CPMI) led the work on creating building blocks of a response to improve the current global cross-border payment arrangements. The report sets out areas where further public sector work could assist in moving to an improved cross-border payments system and in public goods or removing unnecessary barriers.
  • Roadmap (Stage 3): Building on the previous stages, the FSB will coordinate, with CPMI and other relevant international organisations and standard-setting bodies, the development of a roadmap to pave the way forward. In particular, the FSB will report to the G20 on practical steps and indicative timeframes needed to do so. The three-stage process will be submitted as a combined report to the G20 in October 2020.

FSB welcomes CPMI report on enhancing cross-border payments

Press enquiries:
+41 61 280 8138
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Ref no: 22/2020

The Financial Stability Board (FSB) today published a letter to the G20 from the FSB Chair, Randal K. Quarles, welcoming the report published today by the Committee on Payments and Market Infrastructures (CPMI), which sets out building blocks for a roadmap to enhance cross-border payments.

The publication of the CPMI report marks the second of a three-stage process, coordinated by the FSB at the request of the G20, to develop a roadmap to enhance cross-border payments. It sets out the necessary elements to address the challenges of high costs, low speed, limited access and insufficient transparency of cross-border payments, highlighted by the first-stage FSB report published in April. The CPMI report was delivered to G20 Finance Ministers and Central Bank Governors ahead of their virtual meeting on 18 July. The FSB will publish the roadmap, as the third and final stage of this deliverable, in October.

In his letter to the G20 the FSB Chair stresses the FSB’s strong support for the CPMI report’s approach. The report provides elements that can be used flexibly within a roadmap, combining enhancements to the current cross-border arrangements and infrastructures with the exploration of more ambitious yet more uncertain longer-term possibilities. He says: “Enhancing cross-border payments is a multi-dimensional problem, which will require the combined efforts of many public and private sector stakeholders. This is why the commitment of the G20 will be so important to provide impetus and coordination in order that the vision of substantially improved payments arrangements can be achieved.”

Notes to editors

The G20 at is February 2020 Finance Ministers and Central Bank Governors meeting asked the FSB to coordinate a three-stage process to develop a roadmap to enhance cross-border payments:

  • Assessment (Stage 1): In its April report the FSB, in coordination with relevant international organisations and standard-setting bodies assessed existing arrangements and challenges.

  • Building Blocks (Stage 2): The CPMI led the work on creating building blocks of a response to improve the current global cross-border payment arrangements. The report sets out areas where further public sector work could assist in moving to an improved cross-border payments system and in public goods or removing unnecessary barriers.

  • Roadmap (Stage 3): Building on the previous stages, the FSB will coordinate, with CPMI and other relevant international organisations and standard-setting bodies, the development of a roadmap to pave the way forward. In particular, the FSB will report to the G20 on practical steps and indicative timeframes needed to do so. The three-stage process will be submitted as a combined report to the G20 in October 2020.

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, Vice Chairman, US Federal Reserve; its Vice Chair is Klaas Knot, President, De Nederlandsche Bank. The FSB Secretariat is located in Basel, Switzerland, and hosted by the Bank for International Settlements.

Supervisory issues associated with benchmark transition: Report to the G20

| PDF full text (3 MB)

This report published by the Financial Stability Board (FSB) and Basel Committee on Banking Supervision (BCBS) concludes that the continued reliance of global financial markets on LIBOR poses clear risks to global financial stability. Transition away from LIBOR by end–2021 requires significant commitment and sustained effort from both financial and non-financial institutions across many jurisdictions. On 1 July the FSB reiterated its view that financial and non-financial sector firms across all jurisdictions should continue their efforts to make wider use of risk-free rates to reduce reliance on IBORs where appropriate and in particular to remove remaining dependencies on LIBOR by the end of 2021.

The report includes insights on remaining challenges to transition based on surveys undertaken by the FSB, the BCBS and the International Association of Insurance Supervisors (IAIS ). It sets out recommendations for authorities to support financial institutions’ and their clients’ progress in transitioning away from LIBOR.

Most FSB jurisdictions have a strategy in place to address LIBOR transition, as opposed to only half of the surveyed non-FSB jurisdictions. Authorities in LIBOR jurisdictions are relatively more advanced in taking initiatives to facilitate and monitor benchmark transition. Financial institutions in these jurisdictions have shown better progress, although significant challenges remain. In light of the expected cessation of LIBOR after end-2021, authorities should strengthen their efforts in facilitating financial and non-financial institutions to transition away from LIBOR.

The report includes three sets of recommendations to support LIBOR transition that should generally be applicable to all jurisdictions with LIBOR exposures.

  • Identification of transition risks and challenges – authorities and standard-setting bodies to issue public statements to promote awareness and engage with trade associations, and authorities to undertake regular surveys of LIBOR exposure and to request updates from financial institutions.
  • Facilitation of LIBOR transition – authorities to establish a formal transition strategy supported by adequate resources and industry dialogue. Supervisory authorities should consider increasing the intensity of supervisory actions when the preparatory work of individual banks is unsatisfactory.
  • Coordination – authorities to promote industry-wide coordination, maintain dialogue on the adoption of fallback language, consider identifying legislative solutions, where necessary, and exchange information on best practices and challenges. The FSB and the standard-setting bodies will coordinate at the international level to identify key common metrics for monitoring transition progress.

LIBOR transition is a G20 priority and the report responds to the G20 request to identify remaining challenges to benchmark transition and to explore ways to address them. The report is a deliverable for the G20 Finance Ministers and Central Bank Governors virtual meeting on 18 July.

The FSB set out in 2014 a series of recommendations for strengthening key interbank offered rates (IBORs) in the unsecured lending markets, and for promoting the development and adoption of alternative nearly risk-free reference rates, where appropriate. The FSB published its most recent annual progress report in December 2019 on implementation of the recommendations.

FSB and Basel Committee set out supervisory recommendations for benchmark transition

  • Continued reliance of financial markets on LIBOR poses clear risks to global
    financial stability.
  • Transition away from LIBOR by end-2021 requires significant commitment and sustained effort from both financial and non-financial institutions.
  • Report includes three sets of recommendations to support LIBOR transition.

The Financial Stability Board (FSB) and Basel Committee on Banking Supervision (BCBS) today published a report on Supervisory issues associated with benchmark transition. Continued reliance of financial markets on LIBOR poses clear risks to global financial stability. Transition away from LIBOR by end-2021 requires significant commitment and sustained effort from both financial and non-financial institutions across many jurisdictions. The report includes insights on remaining challenges to transition based on surveys undertaken by the FSB, the BCBS and the International Association of Insurance Supervisors (IAIS). It sets out recommendations for authorities to support financial institutions’ and their clients’ progress in transitioning away from LIBOR.

Most FSB jurisdictions have a strategy in place to address LIBOR transition, as opposed to only half of the surveyed non-FSB jurisdictions. Authorities in LIBOR jurisdictions are relatively more advanced in taking initiatives to facilitate and monitor benchmark transition. Financial institutions in these jurisdictions have shown better progress, although significant challenges remain. In light of the expected cessation of LIBOR after end-2021, authorities should strengthen their efforts in facilitating financial and non-financial institutions to transition away from LIBOR.

The report includes three sets of recommendations to support LIBOR transition that should generally be applicable to all jurisdictions with LIBOR exposures.

  • Identification of transition risks and challenges – authorities and standard-setting bodies to issue public statements to promote awareness and engage with trade associations, and authorities to undertake regular surveys of LIBOR exposure and to request updates from financial institutions.
  • Facilitation of LIBOR transition – authorities to establish a formal transition strategy supported by adequate resources and industry dialogue. Supervisory authorities should consider increasing the intensity of supervisory actions when the preparatory work of individual banks is unsatisfactory.
  • Coordination – authorities to promote industry-wide coordination, maintain dialogue on the adoption of fallback language, consider identifying legislative solutions, where necessary, and exchange information on best practices and challenges. The FSB and the standard-setting bodies will coordinate at the international level to identify key common metrics for monitoring transition progress.

LIBOR transition is a G20 priority and the report responds to the G20 request to identify remaining challenges to benchmark transition and to explore ways to address them. The report will be delivered to G20 Finance Ministers and Central Bank Governors ahead of their virtual meeting on 18 July.

Notes to editors

The FSB set out in 2014 a series of recommendations for strengthening key interbank offered rates (IBORs) in the unsecured lending markets, and for promoting the development and adoption of alternative nearly risk-free reference rates, where appropriate. The FSB published its most recent annual progress report in December 2019 on implementation of the recommendations. The BCBS published a newsletter in February 2020 outlining regulatory and supervisory implications related to benchmark rate reforms.

Press enquiries:

BCBS: +41 61 280 8188, [email protected]

FSB: +41 61 280 8138, [email protected]

IAIS publishes supervisory recommendations to address remaining challenges of LIBOR transition in the insurance sector

8 July 2020

Central Bank Transparency Code (CBT)

2 July 2020

View the Standard

Transparency is a key element of central bank accountability. Over the last two decades, central banks were granted broader mandates to pursue a range of new policy goals and a large degree of autonomy. As the diversity and complexity of central banks’ operational toolkits increased following the 2008 Global Financial Crisis and more recently the COVID-19 pandemic, the level of challenges over the use of unconventional monetary policy measures have increased. Consequently, these challenges prompted calls for greater public scrutiny, and highlighted the importance of balancing central bank autonomy with appropriate accountability and transparency arrangements. Transparency facilitates accountability by informing legislatures, markets, citizens, and other stakeholders on a central bank’s performance and compliance with its mandate and also can improve policy effectiveness.

The CBT consists of a five-pillar framework, covering every aspect of central banking. These pillars cover principles on a central bank’s: (i) transparency in governance (including, for example, its legal framework, governance, accountability arrangements, communications, and confidentiality); (ii) transparency in policies; (iii) transparency in operations; (iv) transparency in outcome; and (v) transparency in official relations. Pillars II, III, and IV relate to the key central bank functions, that is, monetary policy, foreign exchange (FX) management and administration, international reserve management, macroprudential policy, emergency liquidity assistance (ELA), financial integrity, and consumer protection.

The CBT allows central banks to map their transparency frameworks, enhance their accountability, contribute to policy effectiveness, and improve dialogue with their stakeholders. The CBT considers transparency as an institutional feature aimed at ensuring comprehensive public access to the information on the central bank and its activities, at the same time striking the appropriate balance between transparency and a legitimate need for confidentiality. Central banks could assess their existing transparency frameworks using the CBT, which allows for more informed central bank choices on transparency and more effective communication between the central bank and its various stakeholders. In doing so, a better understanding of the rationale for central bank autonomy, mandate, governance, policies, operations, outcomes, and official relations will reduce uncertainty and facilitate a public dialogue that can anchor public expectations and foster better policies.

Assessment Methodology

View the Assessment Methodology

CBT Reviews are based on the CBT Guidance Note. The Guidance Note is available on the CBT website. This document provides guidance and practical suggestions for conducting reviews of the Central Bank Transparency Code (CBT) to IMF staff and experts conducting reviews, as well as to the central banks participating or intending to participate in the CBT review. The Guidance Note is not intended to be a detailed or prescriptive manual for measuring transparency, nor is this the intention of the CBT. Instead, the reviewer(s) should use the note to guide their reviews, while maintaining sufficient flexibility for interpretation and country-specific circumstances.

Conclusions from the FSB’s too-big-to-fail evaluation

1 July 2020

Claudia M. Buch, Vice-President, Deutsche Bundesbank sets out the conclusions from the FSB’s evaluation of the effects of too-big-to-fail reforms. The report finds that too-big-to-fail reforms made banks more resilient and resolvable, but gaps need to be addressed. Responses to the public consultation are invited by 30 September 2020.