Central banks set to ask for cheaper cross border payments

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Daniel Webber
Daniel Webber
Founder & CEO
Daniel is Founder and CEO of FXcompared and has 18 years of experience in the international finance world focusing on cross-border payments, technology and the property sectors. Daniel is widely… Read more
  • The call came from the Bank for International Settlements (BIS), which is based in Switzerland and represents many central banks
  • Intervention also focused on the role of blockchain-powered payments systems
  • “The changes under way require [central banks] to step up and play a more significant part in improving the safety and efficiency of these systems”, said BIS spokesperson

A financial institution which represents some of the world’s most prominent central banks has confirmed that those banks will ask governments to cut the costs for international money transfer.

The Bank for International Settlements, which is an umbrella group for central banks around the world, confirmed on Sunday that its member banks would tell governments that a “roadmap” towards reducing the cost of cross border payments was desired.

In its quarterly publication, the Bank for International Settlements – which is based in the Swiss city of Basel – pushed the Group of Twenty (G20) influential world leaders to support its attempts to bring down these costs.

This plan is currently in development, and it is being worked on by a range of professionals and individuals.

Central banks themselves are involved, while civil servants from finance ministries are also involved – as are figures from regulatory bodies.

The plan will focus on what problems currently exist for the sector in terms of high cross border payment costs, and also what the risks are currently.

However, it is believed that those behind the plan want to build political support for it.

There is understood to be particular concerns about the behaviour of so-called “correspondent banks”, which sometimes fail to provide the necessary infrastructure or services for well-regulated and cost-effective money transfer on the ground around the world.

According to the Bank for International Settlements General Manager Agustín Carstens, central banks played a “core role” in the state of payments services.

“Central banks have a core role in payment systems”, he was quoted as saying.

“The changes under way require them to step up and play a more significant part in improving the safety and efficiency of these systems”, he added.

The report also looked in some detail at the proposed cryptocurrency from Facebook, known as Libra.

Since it was announced, Libra has been largely discredited after a range of institutions which were supposed to be supporting it pulled out.

The controversial topic of blockchain-powered payments systems still occupies people’s minds in the cross border payments sector.

In its report, BIS appeared to endorse the central bank digital currency (CBDC) idea – which would see cryptocurrencies offered by the central bank itself.

“Money and payment systems are founded on trust in the currency – whether cash or digital – and this trust is something that only the central bank can ensure”, it wrote.

The cross border payments world is a busy and ever-changing one.

If you’d like to ensure that you don’t lag behind, why not head over to our news page and bookmark it?


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