Nations have a ‘considerable distance’ to travel and ‘more needs to be done across all the key areas for action’ to achieve G20 targets to improve cross-border payments, according to a data-fuelled assessment.
This verdict is aired today (9 October) in what is described as a ‘consolidated report’ on progress towards achieving cross-border payments targets published in October 2021, to be achieved by 2027 in most cases.
The document is published by the Financial Stability Board (FSB) alongside the first annual report on key-performance indicators (KPIs) for meeting the targets, which were devised after a ‘G20 Cross-Border Payments Roadmap’ was launched in October 2020. This high-profile strategy aims to make such payments ‘faster, cheaper, more accessible and transparent’.
The two publications provide a qualitative and quantitative assessment of the challenges facing cross-border retail and wholesale payments, as well as remittances, and progress being made on G20 priority actions, as well as public- and private-sector projects underway to boost cross-border payments.
The 33-page ‘G20 Roadmap for Enhancing Cross-Border Payments – Consolidated progress report for 2023’ and 44-page ‘Annual Progress Report on Meeting the Targets for Cross-Border Payments 2023 – Report on Key Performance Indicators’ have been sent to G20 finance ministers and central bank governors ahead of their next meeting. This will take place in Marrakech, Morocco, on 11-12 October.
RELATED ARTICLE Financial Stability Board hunts case studies on cross-border payments data ‘frictions’ – a news story (26 September 2023) on the FSB inviting authorities including regulators and data protection authorities to ‘develop case studies to assess the impact of selected frictions on cross-border payments and identify where action should be prioritised’
‘Substantial’ differences across regions
The FSB’s assessment follows the delivery of a letter last month from the body’s chair Klaas Knot to G20 leaders stating that ‘further political support and sustained effort by the public- and private-sectors’ would be required to reach the 2027 targets.
It is 12 months since the FSB said that work had reached an ‘inflection point’ and must ‘move to practical projects’, while it also detailed priority actions in a report delivered to G20 finance ministers and central bank governors ahead of a meeting on 24‑25 February this year.
Examples of priorities include: developing the capabilities of central payment and settlement infrastructures; moving to common data standards for payments messages; ‘delivering the tools needed’ for harmonised application programming interfaces (APIs) in the payments industry; and ‘providing a vehicle for the investigation of the legal, regulatory and supervisory frameworks that govern cross-border payments’.
The newly released data ‘confirms that user experiences – including costs and speed of payments – differ substantially across regions’, according to an FSB media release also published today. It acknowledges that ‘data gaps remain’, saying that the FSB, whose secretariat is hosted by the Bank for International Settlements (BIS) in Switzerland, will ‘continue to work to enhance the data available, and where possible, fill the gaps’. The KPIs report states that ‘no existing data sources comprehensively capture data about cross-border payments globally for any of the three market segments [retail, wholesale and remittances].’
The release concludes that ‘if the relevant actors take the necessary actions, through the public and private sector working together the roadmap goals can be achieved’.
FURTHER READING G20 TechSprint 2023 on cross-border payments winners revealed – a news story (6 September) on the results of the ‘G20 TechSprint 2023’ focused on innovative solutions aimed at improving cross-border payments
KPIs will ‘help target action’: Cunliffe
“For the first time, we now have the data to measure how far we need to go to achieve the G20 targets for enhanced cross-border payments,” said Jon Cunliffe, who is co-chair of the FSB’s cross-border payments co-ordination group.
“There are encouraging signs of progress, but there is a considerable distance to go,” Cuncliffe, who is deputy governor of the Bank of England as well as chair of the BIS-hosted Committee on Payments and Market Infrastructures (CPMI), said. “Continued action and commitment by the public and private sectors is required. The progress report and key performance indicators published today will help target this action to achieve the improvements we need.”
Cuncliffe’s co-chair of the FSB’s cross-border payments co-ordination group is South African Reserve Bank governor Lesetja Kganyago, who said the KPIs would “help to stimulate discussion among private and public sector stakeholders about the nature of the remaining challenges”.
“The picture varies considerably by region and by type of payment – the data shows where we need to foster the greatest improvement, which will be the priority for future work. This will require partnership with countries beyond the G20,” Kganyago added.
The FSB has also today published a third (18-page) document (‘Annual Progress Report on Meeting the Targets for Cross-Border Payments – Methodology document’), which provides details about the data sources used in estimating the KPIs and underlying methodologies.
