{
  "title": "Confronting Fragmentation: How to Modernize the International Payment System",
  "publication": "IMF News, May 10, 2022",
  "sourceUrl": "https://www.imf.org/en/news/articles/2022/05/10/sp051022-md-concluding-remarks-at-the-snb-high-level-conference",
  "canonical": "https://www.imf.org/en/news/articles/2022/05/10/sp051022-md-concluding-remarks-at-the-snb-high-level-conference",
  "overlayPath": "/en/news/articles/2022/05/10/sp051022-md-concluding-remarks-at-the-snb-high-level-conference/index.md",
  "summary": "Our discussions today—at the 10th edition of this conference—have rightly focused on a key question: how to secure a stable, efficient, and inclusive international monetary system that is fit for the digital age.",
  "authors": [
    "Kristalina Georgieva"
  ],
  "publishDate": "2022-05-10",
  "sections": [
    {
      "heading": "1. Introduction",
      "content": "- Conference: 10th edition of the IMF-Swiss National Bank High-Level Conference (Zurich).\n- Core question: how to secure a stable, efficient, and inclusive international monetary system fit for the digital age.\n- Framing:\n  - International monetary system characterized as \"rules, mechanisms, and institutions\" governing monetary arrangements and capital flows between countries.\n  - Analogy: international payment system as \"roads, railways, bridges, and tunnels\" that enable currency exchange and capital flow.\n- Key risks and stakes:\n  - Russia’s invasion of Ukraine increased the risk of a \"new Cold War\" and stronger forces of fragmentation.\n  - Cost of disintegration: would undermine productivity and living standards; historically integration \"tripling the world economy and lifting 1.3 billion people out of extreme poverty over the past three decades.\"\n- Principal proposal: build new public infrastructure to connect and regulate various payment systems to counter fragmentation."
    },
    {
      "heading": "2. The International Payment System — diagnosis",
      "content": "- Components identified:\n  - Links between correspondent banks; messaging systems such as Swift; money transfer businesses; credit card networks; foreign exchange markets; arrangements between central banks.\n- Shortcomings:\n  - Cross-border payments are \"expensive, slow, opaque, and not available to many of those who need them most.\"\n  - Interoperability failures: \"many of the ‘roads’ lead to nowhere, the ‘railways’ work on different gauges, and the ‘tunnels’ are not well lit.\"\n  - Intermediary costs reduce end-recipient value.\n- Key statistic on remittances:\n  - Average cost of a transfer is 6.3 percent.\n  - Result: \"some $45 billion per year are diverted into the hands of intermediaries and away from ultimate beneficiaries.\"\n- Fragmentation drivers:\n  - Structural: private digital money providers offering cheap cross-border payments within closed networks.\n  - Geopolitical: countries may develop parallel, disjointed payment systems to mitigate sanctions risk, creating \"payment blocs\" that worsen fragmentation and raise costs."
    },
    {
      "heading": "3. Modernizing the International Payment System — strategy and design principles",
      "content": "- Overarching message: countries should collaborate to build public digital platforms that connect payment systems, making payments more efficient, safer, inclusive, and reducing fragmentation risk.\n- Three mountaineering-inspired principles:\n  (a) Use state-of-the-art equipment\n  - Emphasize new technologies and digital platforms as public infrastructure.\n  - BIS Innovation Hub pilots show cross-border transfers can be \"nearly instantaneous and costless.\"\n  - Platform functions:\n    - Facilitate communication, regulatory compliance, competition among payment providers, and eventual cross-border settlement.\n    - Enable programmable features: currency exchange, support for less liquid currency pairs, hedging, automated bids in foreign exchange auctions.\n    - Offer a standard programming interface (\"a shared language\") to access and automate services.\n  - Supported forms of money on the platform could include commercial bank deposits, central bank digital currencies, and some stablecoin arrangements \"if they are well-designed and regulated.\"\n  - Importance for less advanced payment-system economies: embracing diverse forms of money to \"make payments work for all people, in all countries.\"\n  (b) Adapt to the terrain\n  - Recognize changing capital flow dynamics as payments become more efficient:\n    - Possible overall increase in flows; potential boost to productive investment and market integration; more flows to low-income countries or previously underserved sectors.\n    - Risks: higher financial market contagion, valuation effects, sudden capital flow reversals—particularly harmful for developing countries with high external financing needs.\n  - Policy responses:\n    - Right fiscal, monetary, structural, and legal measures; in some cases, capital flow management measures to slow flows.\n    - Updated IMF institutional view on capital flow management measures referenced as background for policy agility.\n  - Currency substitution risk:\n    - Digital availability of a desired foreign currency increases the risk of currency substitution.\n    - Possible need for capital flow management measures to \"throw sand in the gears\" to protect monetary frameworks.\n  - Crypto asset risk:\n    - Crypto assets could be used to circumvent capital flow management measures.\n    - New IMF research (published today) highlights this risk and motivates calls for comprehensive and coordinated global regulation.\n  - Technology and data needs:\n    - Better data and technologies—such as \"regtech\" and \"suptech\"—needed to detect risks and irregularities in capital flows automatically.\n  - Platform design implication:\n    - Public digital payment platforms can be calibrated to country-specific needs and policy objectives and include appropriate risk mitigation measures.\n  (c) Rely on your team\n  - Governance is central:\n    - Questions to resolve: access conditions, operational roles, oversight, private sector roles.\n    - Predictability encourages integration; excessive discretion increases fragmentation risk.\n  - Roles for international organizations:\n    - IMF, Bank of International Settlements, Financial Stability Board can suggest solutions, foster consensus, and convene policymakers, private firms, and civil society."
    },
    {
      "heading": "4. Conclusion — call to collective action",
      "content": "- Inspirational analogy: 1291 Swiss mountaineers who pledged cooperation and common rules.\n- Final charge: work together to put the international payment system on a sounder footing to support the digital world and foster an international monetary system that brings greater stability and prosperity for all.\n\nConcluding remarks by Kristalina Georgieva, IMF Managing Director; As Prepared for Delivery, May 10, 2022 — Concluding Remarks at the IMF-Swiss National Bank High-Level Conference, Zurich.\n\n---\n\n\n References\n\n- https://www.imf.org/en/about/senior-officials/bios/kristalina-georgieva\n- PRESS CENTER\n- institutional view\n- New IMF research\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2022/05/10/sp051022-md-concluding-remarks-at-the-snb-high-level-conference"
    }
  ],
  "bullets": [
    "[Markdown version](/en/news/articles/2022/05/10/sp051022-md-concluding-remarks-at-the-snb-high-level-conference/index.md)",
    "[Structured JSON version](/en/news/articles/2022/05/10/sp051022-md-concluding-remarks-at-the-snb-high-level-conference/index.json)",
    "[Bundle manifest](/en/news/articles/2022/05/10/sp051022-md-concluding-remarks-at-the-snb-high-level-conference/bundle-manifest.json)",
    "Authors: Kristalina Georgieva",
    "Published: May 10, 2022",
    "Conference: 10th edition of the IMF-Swiss National Bank High-Level Conference (Zurich).",
    "Core question: how to secure a stable, efficient, and inclusive international monetary system fit for the digital age.",
    "Framing:",
    "Key risks and stakes:",
    "Principal proposal: build new public infrastructure to connect and regulate various payment systems to counter fragmentation.",
    "Components identified:",
    "Shortcomings:",
    "Key statistic on remittances:",
    "Fragmentation drivers:",
    "Overarching message: countries should collaborate to build public digital platforms that connect payment systems, making payments more efficient, safer, inclusive, and reducing fragmentation risk.",
    "Three mountaineering-inspired principles:",
    "Inspirational analogy: 1291 Swiss mountaineers who pledged cooperation and common rules.",
    "Final charge: work together to put the international payment system on a sounder footing to support the digital world and foster an international monetary system that brings greater stability and prosperity for all.",
    "[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/)",
    "[institutional view](https://blogs.imf.org/2022/03/30/why-the-imf-is-updating-its-view-on-capital-flows/)",
    "[New IMF research](https://www.imf.org/en/Publications/fintech-notes/Issues/2022/05/09/Capital-Flow-Management-Measures-in-the-Digital-Age-516671)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
  ],
  "alternates": {
    "markdown": "/en/news/articles/2022/05/10/sp051022-md-concluding-remarks-at-the-snb-high-level-conference/index.md",
    "json": "/en/news/articles/2022/05/10/sp051022-md-concluding-remarks-at-the-snb-high-level-conference/index.json",
    "bundleManifest": "/en/news/articles/2022/05/10/sp051022-md-concluding-remarks-at-the-snb-high-level-conference/bundle-manifest.json"
  },
  "generatedAtUtc": "2026-09-26T01:12:02.617Z"
}