Bailey urges collective action on cross-border payment reform

Andrew Bailey, Governor of the Bank of England and Chair of the Financial Stability Board, emphasized the tough challenges ahead in reforming cross-border payments. Speaking at the FSB Payments Summit, he called for intensified collective action from both public and private sectors to achieve the G20's goals.

Five years on, the roadmap's mixed results

The G20 Roadmap for enhancing cross-border payments, launched in October 2020, aimed for faster, cheaper, more transparent, and inclusive services.

Notable progress includes the harmonisation of ISO 20022 requirements and the extension of Real Time Gross Settlement (RTGS) operating hours, with over half of jurisdictions now operating extended hours and three-quarters of faster payment systems using ISO 20022. FATF standards for Anti-Money Laundering/Countering the Financing of Terrorism (AML/CFT) have also been revised.

However, despite these advancements, the benefits for end-users remain limited.

Patchy adoption of Legal Entity Identifiers (LEIs) and reformed data privacy legislation persists, indicating that the G20's 2027 targets are still far from being met.

Bailey noted that while much has been done at the international level, implementation remains a key challenge.

Four pillars for the next phase of reform

Bailey identified four key areas for intensified efforts.

The public sector should develop Jurisdiction and Regional Action Plans to support domestic implementation and foster integration, complemented by an early 2027 review of FSB recommendations on data frameworks and regulation.

Innovation and infrastructure development are essential, leveraging digital technology, APIs, and extended RTGS operating hours across retail and wholesale systems.

Reducing regulatory compliance costs without diluting standards is also crucial, exploring consistency and new technologies, exemplified by BIS Project Mandala.

Ultimately, strong commitment and collective action from the private sector are vital to achieve the G20's goals for cheaper, faster, more inclusive, and transparent cross-border payments.

Ambitious, yet achievable

Bailey's assessment underscores a critical juncture: significant progress has been made, yet the most challenging implementation hurdles remain.

He firmly believes these obstacles are not insurmountable, especially with evolving technology, but cautions against expecting quick wins or easy trade-offs between cost and speed.

The path forward demands sustained, collective effort from all stakeholders to truly benefit billions of people globally.