The setting of hard targets to bring international payments into this century should be applauded ­­– but is the FSB’s proposed 2027 deadline too ambitious?

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The value of cross-border payments is predicted to reach more than $250tn by 2027, effectively a rise of more than $100tn in just 10 years, according to the Boston Consulting Group. These payments are critical for economic growth and underpin global trade and e-commerce, global investment flows and global remittance flows. It is no wonder that the Financial Stability Board (FSB), which is tasked with identifying systemic risk in the financial sector, has turned its attention to this area.

Last October, the FSB published the ‘Roadmap for enhancing cross-border payments’, developed with the Committee on Payments and Market Infrastructures (CPMI) et al, to address the challenges and friction that still exist and identified 19 building blocks and five focus areas. This roadmap was endorsed by the G20 at the November Summit.

In its new consultative document, ‘Targets for addressing the four challenges of cross-border payments’, the FSB has put hard, quantitative targets against the major challenges – high cost, low speed, limited access and limited transparency – across three market segments: wholesale, retail and remittances. It has opened a dialogue with industry players, especially around the implementation timeframe.

The FSB’s proposed deadline is the end of 2027 for all challenges and segments, except the cost target for both wholesale cross-border payments, which is more complex and harder to estimate average costs, and remittances, where a 2030 date has already been set as a UN Sustainable Development Goal.

For many banks, to hit these targets will take a massive effort and something that they won’t be able to do alone

That gives banks and other service providers just six years to align with the proposals, which include among others: reducing the global average cost of a retail payment to less than 1%, with no corridors with costs higher than 3%; at least 75% of cross-border payments in each segment should be made within an hour; and all payment service providers must provide a defined list of information, such as total transaction cost and funds tracking.

For many banks, to hit these targets will take a massive effort and something that they won’t be able to do alone, but will need support from counterparties, market infrastructures, central banks and authorities. Importantly, Swift gpi, which counts almost 4000 financial institutions as members and 80 market infrastructures enabled, has gone some way to address both speed and transparency, with the gpi Tracker helping the latter. However, it relies on the established correspondent banking network, which is shrinking. According to CPMI research, the number of correspondent banks fell by 22% between 2011 and 2019.

Banks may also feel threatened by the shrinking fee base for cross-border payments, an area that was already under pressure before the FSB began its work.

Now is the time to speak up. Banks and other service providers have until July 16 to provide feedback and raise concerns. Responses should be sent to

Joy Macknight is editor of The Banker. Follow her on Twitter @joymacknight

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