IIF Authors

Status: Will be live at 01/05/2024 09:00

IIF submission to CPMI on fast payment systems interlinking governance and oversight

The IIF has responded to the Committee on Payments and Market Infrastructures (CPMI)’s interim report and consultation on linking fast payment systems across borders: considerations for governance and oversight.

The IIF continues to support the objectives of the G20 roadmap for enhancing cross-border payments (Roadmap) and broader payments program and welcomes the CPMI’s efforts to develop considerations supporting the important issues of governance and oversight for the interlinking of fast payment systems (FPS) in pursuit of the G20’s objectives of greater speed, transparency and inclusiveness, and lower cost of cross-border payments.

The IIF and its members agree with the need to focus on governance and oversight arrangements around FPS interlinking, particularly as such arrangements can take significant time to establish and calibrate and should ideally be put in place well in advance of implementation.

Additionally, we broadly support the considerations laid out by the CPMI and particularly welcome the interim report’s acknowledgment of the importance of stakeholder involvement and consultation in governance arrangements.

We set out responses to the consultation questions in the body of this submission. Key points include: 

  • The IIF and its members generally believe the working definition of governance is appropriate. From our members’ perspective, the key aspects of governance and governance arrangements to be emphasized are inclusiveness and neutrality.
  • There may be scope to leverage existing oversight frameworks and/or arrangements in the creation of the governance arrangements for the interlinking arrangement, but in many cases, it will be necessary to “start from scratch” and design fit-for-purpose governance arrangements for the interlinking arrangement itself. 
  • FPS governance arrangements will evolve over time and some considerations are more salient at the outset while others will be more salient during business as usual. It would be helpful to sequence the order in which they should be addressed to support the efficient development of an interlinking arrangement. 
  • While compatible strategic and economic policy priorities are desirable among jurisdictions considering FPS interlinking, they should not be seen as a pre-condition or a necessary ongoing condition to the interlinking arrangement’s existence. 
  • There are other important drivers that can motivate the creation of linked systems, including business/technical factors including the critical need for a business case with commercial viability.
  • Interlinking arrangements benefit most from a standards-based approach to drive interoperability and innovation. This allows diverse payment service providers to access the systems over time. 
  • Care should be taken to avoid blurring boundaries between the roles of the public and private sectors. The starting point should be that the jurisdiction where the arrangement is domiciled has oversight, rather than the overseers of the FPSs being interlinked. 
  • In general, CPMI should avoid foreclosing reasonable commercial choices through its guidance.
  • In general, the possibility of multi-tier interlinking arrangements should be open and should inform the design choices around governance and oversight arrangements. 

Lastly, we observe that FPS interlinking is not always the best cross-border payment solution and may not enhance all corridors. The use case and context matter. Other solutions beyond FPS interlinking should be continually considered as well (as mentioned in CPMI’s 2022 report).