This course will deep-dive into the issues, challenges and painpoints as well as solutions being proposed for cross-border payments
. It will also explore the changing cross-border payment landscape dynamics and potential challenges and benefits of emerging technologies such as the use of blockchain and the rising interest in stablecoins, such as Libra.
For many businesses, individuals and government agencies, making or receiving payments that cross borders is a necessary activity. Many businesses serve customers abroad and rely on buying goods from suppliers abroad but, in order to do so, they need to be able to receive payments from those customers and make payments to suppliers. Similarly, many people depend on the ability to readily send or receive cross-border payments, such as migrants who send money to families in their home countries or individuals who make online purchases from foreign retailers.
Cross-border payments are typically perceived as being slower, costlier and more opaque than domestic payments. They may also be less safe, and pose more challenging AML/CFT issues than domestic payments. In terms of cost, cross-border payments are more expensive than domestic payments, and it is often difficult to assess and deduce charges incurred through multiple correspondent banks, leading to a loss of value and a lack of visibility and auditability. As payment messages are transferred between banks and across borders, information held on the payment may be truncated or the detail lost, making payments and collections more difficult to reconcile. Cross-border retail payments involve more risks to manage, complexities to navigate, and rules to comply with than domestic payments.
According to the CPMI report "the difference between cross-border payments and domestic payments in terms of end user experience can often feel more disproportionate than those factors might explain.” This difference is exacerbated by technological developments and innovations that have recently led to broad improvements in domestic payments in many countries. At the same time, cross-border retail payments are becoming increasingly important for many end users, which is likely to further increase the already significant volume of cross-border retail payments.
The rapid advancement of technology is transforming the provision of financial services and products, and has opened new opportunities for the enhancement of cross-border payments. For domestic retail payments, in particular, payment services have seen significant change in recent years through the introduction of new payment methods, platforms and interfaces. Emerging technologies are being leveraged to transform in areas such as digital identity, data protection and privacy, instant cross-border payments, and payments-channel integration to meet customer expectations and stay competitive as agile newcomers enter the industry. The modus operandi for business as usual is one that fiercely demands continuous innovation and adoption of emerging technologies. Heightened openness is spurring the need for robust digital identity, advanced data and privacy protection, and regulators’ emphasis on balancing supply push with market-demand pull.
The course will conclude with a review of the latest developments in the overall acceptance and regulation of privately-issued digital currencies and other crypto-assets, and the current state of philosophy and development surrounding central bank digital currencies (CBDCs).
Through lectures, case studies, and sharing of experiences, the objectives of this course are for participants to:
- Examine the issues, challenges and painpoints as well as solutions being proposed for cross-border payments;
- Assess the role and importance of interoperability and open application programming interface (API) in cross-border payment;
- Assess and discuss the changing cross-border payment landscape dynamics and potential challenges and benefits of emerging technologies;
- Examine the risk and benefits of blockchain and stablecoins for cross-border payments, and related challenges for central banks and regulators.
- Understand the current state of acceptance and regulation of privately-issued digital currencies.
- Understand the latest developments in central bank digital currencies (CBDCs) as an alternative to cash and privately-issued digital currencies.
- Discuss cybersecurity and financial markets infrastructure (FMI) resilience
The course is aimed at central bank staff whose principal role is the operation or oversight of systemically important payment systems, with at least five years relevant working experience. Staff who are involved in developing payment policy and oversight may also apply. Participants should be familiar with the basic characteristics and functioning of large-value payment systems (LVPS), retail payment systems (RPS), payment cards, and various models of mobile financial services.