Today with one click an individual can have a live chat with multiple friends, living in multiple countries, and a small business owner in Canada can browse products being sold by an independent artist in New Zealand, but what you can’t do with consistent ease is make payments to individuals or businesses in other countries. This is a problem that needs to be addressed, especially when you consider that in 2019 cross-border transactions accounted for $24.81 trillion globally (USD). This factor, combined with others, such as the continued expansionary growth in e-commerce, highlights the need for more attention to be placed on cross-border payment activities.
While many private sector players have been working to reduce friction in the cross-border payments market, renewed focus from international payments system regulators—in the form of the Financial Stability Board’s (FSB) roadmap to enhance cross-border payments—will be an important catalyst to coordinate countries’ efforts to improve existing payments systems and build the framework for international payment system interoperability.
Some of the key focus areas for building interoperable cross-border payments, according to the FSB report, are the improvement of existing payment infrastructures and establishing arrangements to support the requirements of cross-border payments. The report points out that countries need to consider such things as: making operational improvements to existing payment infrastructures; increasing access to payment systems by banks, non-banks and market infrastructures; extending and aligning operating hours between systems; and pursuing interlinking and exploring reciprocal liquidity arrangements.
While the Bank of Canada will take the lead in coordinating Canada’s overall regulatory response to this important initiative, Payments Canada, as the operator of Canada’s national payment systems, will be responsible for delivering and supporting many aspects of the program.
Payments Modernization in Canada
The momentum of the FSB roadmap comes at an excellent time as Payments Canada is midway through a multi-year payments Modernization initiative. Guiding our country’s payments Modernization journey are the needs of Canadians, including financial institutions, businesses, governments and consumers. This collection of needs is summarized in our whitepaper, the Vision for the Canadian Payments Ecosystem (the Vision).
The Vision for modernizing Canada’s payments system is to have “a modern payments system that is fast, flexible and secure, promotes innovation and strengthens Canada’s competitive position.” The Vision identifies the need for ...
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