Cross-border payments sit at the heart of international trade and economic activity. However, for too long cross-border payments have faced four particular challenges: high costs, low speed, limited access and insufficient transparency. Faster, cheaper, more transparent and inclusive cross-border payments would have widespread benefits for supporting economic growth, international trade, global development and financial inclusion.
The FSB has been leading work to assess and address the decline in correspondent banking and remittance payments since 2015. This work has now been integrated into the G20 cross-border payments roadmap.
G20 cross-border payments roadmap
At the request of the G20, the FSB has developed a roadmap to enhance cross-border payments, in coordination with the Committee on Payments and Market Infrastructures (CPMI) and other relevant international organisations and standard-setting bodies. The roadmap provides a high-level plan, which sets ambitious but achievable goals and milestones. It is designed to allow for flexibility to accommodate the differing starting points for payment system arrangements in countries and regions around the world and to be adaptable year by year in how the goals are met.
Overview of the focus areas and associated building blocks
The roadmap deals with deep-seated, long-standing issues. It aims to achieve practical improvements in the shorter term while acknowledging that other initiatives will need to be implemented over longer time periods. It includes a set of committed actions and timetables, to achieve early results in improving existing arrangements and, beyond that point, indicative milestones that allow adjustments to the way forward in response to a constantly innovating market.
The roadmap will bring together a coalition of international and national actors to deliver on its five focus areas.
The involvement of the private sector, sharing their insights and practical expertise, as well as delivering change, will be key to support the practical implementation of the roadmap across the various projects. Public consultation will take place at appropriate points, in order to ensure transparency and accountability.
Quantitative targets to enhance cross border payments
A foundational step in the roadmap consists of setting global quantitative targets for addressing the challenges of cost, speed, transparency and access faced by cross-border payments.
The targets were set following public consultation and were endorsed by the G20 Leaders at the October 2021 Summit. They provide a common vision for the improvements sought under the Roadmap and establish expected outcomes. They play an important role in defining the ambition of the Roadmap to enhance cross-border payments and creating accountability.
In July 2022, the FSB published an interim report, which provides an update on the work toward establishing KPIs and identifying sources for the data necessary for their calculation. The FSB welcomes feedback from stakeholders to this preliminary work.
In November 2022, the FSB we published a report to the G20 with further details of the implementation approach, including key performance indicators (KPIs) to be used for monitoring progress toward the G20 targets for cross-border payments.
Correspondent banking and remittances
The FSB launched its four-point action plan in November 2015 to assess and address the decline in correspondent banking relationships. The plan covers:
Further examining the dimensions and implications of the issue;
Clarifying regulatory expectations, including guidance from FATF and BCBS;
Domestic capacity-building in jurisdictions that are home to affected respondent banks; and
Strengthening tools for due diligence in correspondent banks.
The FSB’s March 2018 recommendations to address problems that remittance service providers have accessing banking services cover:
Promoting dialogue and communication between the banking and remittance sectors;
International standards and oversight of the remittance sector;
The use of innovation in the remittance sector and its possible role in enabling RSPs greater access to banking services; and
Technical assistance on remittance-related topics.
The FSB has published regular updates to the G20 on the ongoing work to address these issues. The Committee on Payments and Market Infrastructures provides regular data on correspondent banking so that the FSB can assess whether the agreed actions are being successful.
The FSB’s work in this area has now been integrated into the G20 cross-border payments roadmap.