## International Webinar on: “Enhancing Digital and Global Infrastructures in Cross-border Payments” _IMF News, September 27, 2021_ ## Source details **Canonical URL:** [International Webinar on: “Enhancing Digital and Global Infrastructures in Cross-border Payments”](https://www.imf.org/en/news/articles/2021/09/27/sp092721-enhancing-digital-and-global-infrastructures-in-cross-border-payments) ## Other formats - [Markdown version](/en/news/articles/2021/09/27/sp092721-enhancing-digital-and-global-infrastructures-in-cross-border-payments/index.md) - [Structured JSON version](/en/news/articles/2021/09/27/sp092721-enhancing-digital-and-global-infrastructures-in-cross-border-payments/index.json) - [Bundle manifest](/en/news/articles/2021/09/27/sp092721-enhancing-digital-and-global-infrastructures-in-cross-border-payments/bundle-manifest.json) ## Bibliographic details - Published: September 27, 2021 --- ### Opening remarks and framing - Speaker: Managing Director Kristalina Georgieva; event: International Webinar on: “Enhancing Digital and Global Infrastructures in Cross-border Payments”; venue: Bank of Italy, 27-28 September 2021; date of remarks: September 27, 2021. - Central metaphor: cross-border payment systems described as the “plumbing of modern payment systems” — hidden yet essential, requiring urgent upgrade. - Characterization of current cross-border payments: slow, expensive, opaque, cumbersome, and for some people inaccessible; poorest users worst affected. - Demand signal: “several dozen countries came to the Fund in the last 6 months alone to ask for a helping hand.” - Three priorities to realize the promise of new technologies and manage risks: - Cooperation around technology and design choices. - A strong enabling environment: incentives for private sector participation, and solid regulatory, legal, and data frameworks. - A focus on macrofinancial stability. ### I) Fixing the pipes (coordination and interoperability) - Core finding: cross-border payments can only be as efficient as the weakest link; solutions must be interoperable and avoid piecemeal roll-outs. - Endorsement: the G20 Roadmap sets out key challenges and essential response elements; countries should “stay in lockstep” with its guidance. - Targets and ambitions: the Roadmap is “appropriately broad,” will include clear targets for accountability, and provides a framework for linking existing payment systems across borders. - Examples of progress: - Singapore and Thailand have linked their payment systems; result: a worker in Singapore can send money to family in Thailand within minutes using a mobile phone number (previously could take two days). - BIS Innovation Hub’s testing of novel solutions acknowledged as important early work. - Forward-looking scenarios described: - A virtual marketplace where payment providers across countries transact under common rules and a common technical infrastructure. - A platform to allow households and firms to send Central Bank Digital Currencies directly to each other immediately and without multiple costly intermediaries. ### II) Strengthening the enabling environment (legal, regulatory, data, incentives) - Key point: technology alone does not solve problems; complementary legal, regulatory, and data frameworks plus private-sector incentives are necessary. - SADC regional payments system case study: - Pioneer in 2013; began with 3 countries. - Adjustments made: lowering costs, improving transparency, allowing simple connectivity to incentivize participation. - Platform composition now includes 74 commercial banks and 8 central banks across 15 countries. - Standard-setting and guidance: - Existing work covers anti-money laundering, regulation of virtual asset service-providers, stablecoins, and CBDC — all potentially used in cross-border payments. - Implementation assistance is often required beyond guidance. - IMF capacity development role: - Acting as a transmission line of good practices across members. - Example: work with Pacific Island countries to strengthen AML/CFT frameworks to facilitate cross-border payments and remittance flows. - Data considerations: - As digital money crosses borders, data also crosses borders; data requires attention equal to money transfers. - Cooperation needed to ensure cross-border data can be trusted, accessed, and stored properly while adhering to national privacy standards. ### III) Promoting macrofinancial stability - Tension highlighted: technical objective of open, interoperable cross-border payments versus policy objectives to manage capital flows, limit volatility, and retain monetary policy and exchange rate control. - Specific risks: - Currency substitution: frictionless transfers could lead to widespread use of a foreign currency for saving and transactions, undermining domestic monetary and financial conditions. - Loss of policy tools: authorities cannot set interest rates or lend in large quantities in foreign currency if substitution takes hold. - Current protections and concerns: - Today’s protections: sound policies and institutions that underpin trust in domestic currency, and existing frictions that make foreign currency holding costly. - As money becomes digital, frictions dwindle, raising questions: - Might countries need to limit circulation of foreign currency on their territories to maintain policy independence? If so, how? - Will the international community cooperate to design CBDCs and regulate privately-issued forms of money? - Can walls be avoided that would contravene capital flow benefits for investment and hedging purposes? - Inclusion and fragmentation risk: - Risk of a digital divide where some countries/regions advance while others lag, leading to fragmentation and rising inequality. - IMF and G20 roles: help all 190 IMF members stay abreast of developments, capture promise, avoid peril, and ensure their voices are heard in fora that foster cooperation on principles, standards, and solutions. ### IV) Policy recommendations and institutional roles - Immediate priorities (three interlinked): - Fixing the pipes: coordinate across countries to ensure interoperable technical solutions and avoid piecemeal roll-outs. - Strengthening the enabling environment: coordinate legal, regulatory, and data frameworks and create incentives for private sector participation and end-user connectivity. - Promoting macrofinancial stability: assess and manage risks such as currency substitution and fragmentation, and support financial inclusion. - Practical steps and roles: - Follow and implement the G20 Roadmap and its accountability targets. - Scale regional and cross-border linking examples (e.g., Singapore-Thailand linkage, SADC regional platform). - Support standard setting, and provide capacity development for implementation (IMF role highlighted, including work in Pacific Island countries). - Prioritize data governance and cross-border data cooperation consistent with national privacy standards. - Represent members’ concerns and policy objectives in international fora to foster cooperative design and regulation of CBDC and private-money solutions. ### Conclusion - Cooperation is essential and central to the IMF’s new strategy on digital money. - The three interconnected priorities—fixing the pipes, strengthening the enabling environment, and dealing with macro-financial implications—must be addressed together. - Quotation: Marcus Aurelius — “We are born for cooperation, as are the hands, the feet, and the eyelids, and the upper and lower jaws.” - Closing exhortation: “Let us continue on this path. Cooperate. Thank you.” *Remarks by Managing Director Kristalina Georgieva, Bank of Italy, 27-28 September 2021; September 27, 2021.* --- ## References - [https://www.imf.org/en/about/senior-officials/bios/kristalina-georgieva](https://www.imf.org/en/about/senior-officials/bios/kristalina-georgieva) - [PRESS CENTER](http://presscenter.imf.org/) - [https://www.imf.org/en/home](https://www.imf.org/en/home) _Source: https://www.imf.org/en/news/articles/2021/09/27/sp092721-enhancing-digital-and-global-infrastructures-in-cross-border-payments_