Six years into a concerted effort by the Group of 20 (G20) to tackle long-standing issues in cross-border payments, global financial regulators report mixed progress. During his keynote address at the FSB Payments Summit, Andrew Bailey, Chair of the Financial Stability Board (FSB), highlighted notable advancements but also underscored lingering challenges.

Bailey noted increased adoption of international standards as a significant development. These include the implementation of ISO 20022 messaging protocols, extended operating hours for financial institutions to better handle international transactions, and enhanced anti-money laundering and counter-terrorism financing measures.

Despite these strides, end-user experiences have seen little improvement. Persistent issues like delays, high costs, and a lack of transparency in cross-border payments continue to plague the system, much as they did decades ago. Bailey warned that if left unaddressed, these problems could undermine the stability of the global financial system and hinder economic growth.

Unforeseen Challenges

Bailey also reaffirmed FSB guidance from last year suggesting G20 countries are unlikely to meet their 2027 targets for improving cross-border payment efficiency. Apart from uneven implementation, several unforeseen developments have posed additional hurdles since the original roadmap was established.

Technological advancements like artificial intelligence and cloud computing are changing customer expectations, but they also facilitate more sophisticated forms of fraud, especially in cross-border transactions.

A Four-Part Plan

To address these challenges, Bailey proposed a four-part strategy. First, public-sector entities should develop local action plans to ensure the effective implementation of international standards at the domestic level. Second, they need to prioritize innovation and modernize infrastructure to better support cross-border payments.

Third, member nations are urged to reduce regulatory compliance costs, as the FSB has identified cases where overly stringent regulations have slowed down cross-border payments. Lastly, he highlighted the importance of greater private-sector participation in reshaping international transactions, suggesting a consortium-based approach could be key.