## A Leap Forward on Cross-Border Payments

_IMF Blog, October 19, 2020_

## Source details

**Canonical URL:** [A Leap Forward on Cross-Border Payments](https://www.imf.org/en/blogs/articles/2020/10/19/blog-a-leap-forward-on-cross-border-payments)

## Other formats

- [Markdown version](/en/blogs/articles/2020/10/19/blog-a-leap-forward-on-cross-border-payments/index.md)
- [Structured JSON version](/en/blogs/articles/2020/10/19/blog-a-leap-forward-on-cross-border-payments/index.json)
- [Bundle manifest](/en/blogs/articles/2020/10/19/blog-a-leap-forward-on-cross-border-payments/bundle-manifest.json)

## Bibliographic details
- Authors: Tobias Adrian, Kristalina Georgieva
- Published: October 19, 2020

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### Overview
- Progress to improve cross-border payments has been slow but is poised to accelerate due to a confluence of new technologies and renewed determination among policymakers.
- Reforms aim to make cross-border payments cheaper, faster, more transparent, and more widely accessible.
- A roadmap led by the Financial Stability Board, with wide institutional participation including the IMF, has been endorsed by the G20; it comprises concrete reforms, practical steps, and milestones with institutional accountability.
- The IMF published a staff paper on the macro-financial implications of new forms of digital money available across borders, complementing the roadmap.

### Potential benefits and stakes
- Reforms could be transformative for:
  - The stability of the international monetary system.
  - Financial inclusion.
  - The efficiency of trade and financial markets.
  - Unlocking innovation and growth, particularly post-COVID-19.
- Users affected range from large companies in less liquid markets, cost-conscious small- and medium-sized enterprises, to remittance senders and recipients.

### Key statistic on remittances
- There are 1 billion people sending and receiving remittances, which at an average cost of 7 percent are still double the target set by United Nations’ Development Goals.

### Four broad areas where cooperation is essential
- First: Design solutions with all countries in mind
  - Countries differ in implementation capacity, existing infrastructure, and financial sector development; solutions must reflect diverse users and needs.
  - Approaches span from improvements to existing systems (e.g., trustworthy digital identities essential for financial inclusion) to exploratory options (e.g., freely tradable digital currencies across borders).
  - Continued pursuit, testing, discussion, and selective discontinuation of solutions is essential.
- Second: Overcome “inaction bias” and ensure wide applicability
  - Example: Operating hours of countries’ settlement systems must overlap to enable real-time settlement; interoperability requires technological, design, legal, and regulatory standards.
  - Cooperation ensures standards meet the needs of a broad community; the IMF can help convene this community.
- Third: Build inclusive, multi-stakeholder solutions
  - Involve central banks, regulators, finance ministries, anti-trust agencies, data protection agencies, and international organizations.
  - Public and private sectors should cooperate: private sector to innovate and interact with users; public sector to regulate, supervise, and provide trust.
  - Public-private solutions should be explored where possible.
- Fourth: Recognize and manage macro-financial spillovers
  - Policies in one country can affect others; new digital money issued in major reserve currencies could:
    - Improve domestic and cross-border payments.
    - Induce citizens abroad to forego domestic currency, especially in countries with high inflation and volatile exchange rates.
    - Potentially facilitate bank runs out of affected countries.
  - Source countries could face more volatile capital inflows and central bank balance sheet effects.
  - Uncertainty exists around whether capital account restrictions can be redesigned to avoid circumvention by digital money.
  - Use of digital money could raise significant risks to financial integrity.
  - These and other scenarios are detailed in the IMF staff paper.

### Global links and the IMF's role
- Transformations in cross-border payments can affect monetary policy, financial stability, capital flows, and international reserves, with implications for the international monetary system.
- The IMF’s Articles of Agreement reflect an early recognition of the link to a multilateral system of payments.
- The IMF plays an active role, working with other international organizations; near-universal membership can help ensure the digital revolution benefits people in all countries.
- The IMF’s global perspective can help identify spillover effects and provide a common forum to address underlying policy dilemmas.

*Tobias Adrian, Kristalina Georgieva. October 19, 2020.*

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## References

- [عربي](https://www.imf.org/ar/News/Articles/2020/10/20/blog-a-leap-forward-on-cross-border-payments)
- [Français,](https://www.imf.org/fr/News/Articles/2020/10/20/blog-a-leap-forward-on-cross-border-payments)
- [日本語](https://www.imf.org/ja/News/Articles/2020/10/20/blog-a-leap-forward-on-cross-border-payments)
- [Português](https://www.imf.org/pt/News/Articles/2020/10/20/blog-a-leap-forward-on-cross-border-payments)
- [paper](https://www.imf.org/en/Publications/Policy-Papers/Issues/2020/10/17/Digital-Money-Across-Borders-Macro-Financial-Implications-49823)
- [explored](https://www.imf.org/en/Publications/fintech-notes/Issues/2019/07/12/The-Rise-of-Digital-Money-47097)
- [October 19, 2020 Conference on Cross-Border Payments](https://www.imf.org/en/News/Seminars/Conferences/2020/10/19/cross-border-payment/)

_Source: https://www.imf.org/en/blogs/articles/2020/10/19/blog-a-leap-forward-on-cross-border-payments_