The Report prepared by IMF and World Bank staff and completed on December 18, 2023, has been released.
The staff report was issued to the Executive Board for information. The report was prepared by IMF and World Bank staff. The views expressed in this paper are those of the IMF and World Bank staff and do not necessarily represent the views of the IMF’s Executive Board. This report is published under the IMF publication process, and the same document has been published in parallel by the World Bank as well.
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EXECUTIVE SUMMARY
The G20 has made enhancing cross-border payments a priority. Faster, cheaper, more transparent and more inclusive cross-border payment services have the potential to be transformative for citizens and economies across the world. It can support economic growth, international trade, global development, and financial inclusion. The Roadmap for Enhancing Cross-Border Payments, launched in 2020, is the first attempt by the international community to address the challenges faced by cross-border payments in a holistic way. A key foundational element in the Roadmap was the publication by the FSB of 11 quantitative targets to define the Roadmap’s aims and create accountability. The targets are global, covering both G20 and non-G20 countries, with a goal for achieving them in end-2027. They pertain to transaction speed, cost, access, and transparency for three market segments: wholesale payments, retail payments, and remittances.
Technical Assistance (TA) plays a critical role in helping achieve the Roadmap targets. The global targets outline a common vision sought under the Roadmap. However, there are considerable differences in the current transaction speeds, costs, levels of access, and transparency among the segments and across countries. Certain country corridors, particularly those between EMDEs, face urgent need to address crossborder payments challenges. Cross-border payments TA can be utilized to address diverse needs at country level and regionally through a range of tools—from analytics to policy and technical advice, workshops, seminars, and training.
TA relates closely to, and builds on, the IMF’s and World Bank’s respective missions. The surveillance work of the IMF assists standard setting bodies in developing and implementing policies. Cross-border payments TA work could underpin more informed policy dialogue in country surveillance work. Surveillance, through Article IV consultations and IMF-World Bank Financial Sector Assessment Programs (FSAPs), are important tools that can be used to support cross-border payments TA and the effective implementation of recommendations, guidance and principles developed by the international community to enhance cross-border payments. The World Bank undertakes analytical and advisory activities to inform country, regional and global development agenda in line with its vision of a world free of poverty on a livable planet. TA also complements World Bank’s financing to support achievement of country policy and institutional reforms as well as development outcomes, strengthen infrastructure, and develop institutional capacity. Through these activities, their broad membership, cross country perspectives and expertise built up over many years, the IMF and World Bank are in a strong position to provide cross-border payments TA under the Roadmap.
A stocktake conducted by the IMF and World Bank demonstrated that recent and ongoing TA supports the Roadmap’s three interconnected priority themes: (i) payment system interoperability and extension, (ii) legal, regulatory, and supervisory frameworks, and (iii) cross-border data exchange and message standards. The stocktake shows that both institutions offer programs and activities to member countries relevant to the priority themes. TA by both institutions often covers and benefits domestic as well as cross-border payments, although the stocktake focused primarily on crossborder aspects. Both institutions also identify opportunities to scale up support within their respective mandates and scope. As these programs and activities will contribute to the same broad priority themes, coordination at country/project level will continue to be important.
The IMF has identified focus areas of TA that can best help achieve the targets under the three priority themes over the coming years, while safeguarding the integrity of the financial system. The IMF will focus on access to payment systems, extending and aligning operating hours, interlinking of payment systems (in particular, fast payment systems), application of Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) rules (one of the main considerations for cross-border payments) and ISO 20022 harmonization. The IMF will take concrete steps in 2024 and 2025 to bring forward TA on the focus areas identified. These steps consist of: (1) identifying regions and topics where cross-border payments TA would be most valuable; (2) raising awareness of TA to be offered; (3) contributing, alongside the World Bank, to international work, in particular those that are important for the focus areas; and (4) developing material to share experience of, and distill lessons from, cross-border payments TA. Additional resources will need to be allocated to the cross-border payments work.
The World Bank has identified opportunities to strengthen TA links to the Roadmap, in support of safe, reliable and efficient payment systems. The World Bank provides extensive payment system TA covering both domestic and cross-border payments, within a holistic approach to payment system development, as well as global knowledge and convening. This work draws from insights gained from long-standing data initiatives such as the Remittance Prices Worldwide (RPW) database as well as knowledge exchange. Building on this approach, the World Bank will (i) scale up TA on fast payments and fast payment system (FPS) design for cross-border payments; (ii) continue incorporating greater access, extended operating hours, new technologies, and international communication standards (ISO 20022) in the design, development and/or procurement of domestic and cross-border payment systems as well as payment system policies and regulations; and (iii) leverage cross-sectoral projects to promote the access to and use of digital ID and data exchange across borders, among others. TA directly contributing to the three priority themes will support critical enablers of cross-border payments, regional integration, innovation and a level-playing field. It will continue to be complemented by a cross-sectoral approach to cross-border payments, which also responds to the challenges identified by the Roadmap.
The IMF’s and World Bank’s TA programs are broader in scope than the G20 Roadmap’s priority themes. For example, the IMF assists countries in their efforts in researching and experimenting CBDCs, including their integration into broader national and cross-border payment systems. The World Bank is assisting countries to identify the risks and opportunities of innovation and select approaches most aligned with their policy priorities and capacity, . In other areas, such as financial inclusion, TA is also directly relevant to the Roadmap’s objectives, and complements the priority themes. The TA approaches are expected to be flexible and adaptable in keeping up with the evolution of the cross-border payments landscape and the Roadmap itself. The focus areas identified by the IMF and World Bank’s TA plans are not intended to be static. These will be internally re-evaluated to ensure they remain relevant and take account of lessons learned.
The IMF and World Bank will collaborate, coordinate, and complement each other wherever possible and appropriate at the country/project level. This can include sharing of experiences, developing joint material and the joint delivery of a product/activity or maintaining an open channel of communication to ensure consistency and avoid duplication of their respective activities. Each institution’s differing mandate, expertise, and capacities have been taken into account in the development of the IMF and World Bank TA approaches.
| Acronym/Abbreviation | Full Form |
|---|---|
| AE | Advanced Economies |
| AML/CFT | Anti-Money Laundering / Combating the Financing of Terrorism |
| API | Application Programming Interface |
| BB | Building Block |
| BIS | Bank of International Settlement |
| BISIH | BIS Innovation Hub |
| CBDC | Central Bank Digital Currency |
| CD | Capacity Development |
| CDD | Customer Due Diligence |
| CPMI | Committee on Payments and Market Infrastructures |
| EMDEs | Emerging Market and Developing Economies |
| FATF | Financial Action Task Force |
| FIRM | Financial Inclusion Product Risk Assessment Module |
| FSB | Financial Stability Board |
| FPS | Fast Payment Systems |
| FSAP | Financial Sector Assessment Program |
| G2P | Government-to-Person |
| GPFI | Global Partnership for Financial Inclusion |
| GPSS | Global Payment Systems Survey |
| GPW | Global Payments Week |
| GRWG | Global Remittances Working Group |
| ID4D | Identification for Development |
| IMF | International Monetary Fund |
| LEG | Legal Department |
| MCM | Monetary and Capital Markets Department |
| ML/TF | Money Laundering / Terrorist Financing |
| MSME | Micro-, Small, and Medium-Sized Enterprises |
| MTO | Money Transfer Operator |
| NPS | National Payment System |
| P2P | Person-to-Person |
| PSP | Payment Service Provider |
| RPW | Remittance Prices Worldwide |
| RSP | Remittance Service Provider |
| RTGS | Real-Time Gross Settlement |
| SADC | Southern Africa Development Community |
| SDG | Sustainable Development Goal |
| SSBs | Standard-Setting Bodies |
| TA | Technical Assistance |
INTRODUCTION
1. In 2020, the G20 prioritized enhancing cross-border payments. Faster, cheaper, more transparent, and more inclusive cross-border payments, including remittances, can have widespread benefits for citizens, businesses, and economies worldwide, supporting economic growth, international trade, global development, and financial inclusion. The G20 Roadmap (FSB 2020) was developed to address these challenges and it has accomplished much in its first two years. The Roadmap is now moving forward to a new phase of work. 1
2. The updated Roadmap (FSB 2023a) specifies actions to be undertaken to take forward the work focused on three priority themes. The themes are (i) payment system interoperability and extension, (ii) legal, regulatory, and supervisory frameworks, and (iii) cross-border data exchange and message standards. These actions reflect the avenues available to the Financial Stability Board (FSB), Committee on Payments and Market Infrastructures (CPMI), and their partner organizations, who do not run payment systems and cannot make payments faster, cheaper, or more accessible and transparent on their own. Thus, public and private sector partnership is crucial. They also reflect the importance of global cooperation, extending beyond G20 jurisdictions, and the key role of international organizations (such as the IMF and World Bank) in sharing effective practices through capacity building initiatives.
3. IMF and World Bank TA is an important resource to support member countries in their development of the G20 Roadmap priority themes.2 The IMF and World Bank offer multiple opportunities and resources for member countries to develop capacity which would help them meet the G20 cross-border payments targets (FSB 2021), see Annex 2. The original Roadmap explicitly acknowledged its importance by including TA actions for five of the original nineteen building blocks (BBs). Extending targeted TA to non-G20 countries, including emerging markets and developing economies (EMDEs), is an important part of the wider collaborative effort towards enhancing crossborder payments and achieving the global targets.
4. The IMF and World Bank have extensive experience in TA and established governance processes that can be leveraged to help achieve the G20 targets. Work to date on the CPMI-led BBs has highlighted the strong knowledge-base and experience that CPMI and FSB members have available within their organizations. Through effective collaboration, the leading institutions together can leverage their resources to provide targeted TA activities to countries in need in line with the institution’s mandates. The IMF and the World Bank also have established governmental, public sector and non-profit connections. This experience can be utilized for cross-border payments TA while remaining aligned with the IMF’s and World Bank’s existing TA approaches.
1 This work is foreseen under Action 14 of the updated Roadmap which refers to IMF and World Bank TA specifically. It is acknowledged that TA is not confined to the IMF and World Bank and that G20 countries and others may offer cross-border payments TA within their regions and globally.
2 Technical assistance is the term used throughout this report to represent bilateral country missions as well as other capacity building initiatives beyond activities such as workshops, seminars, and training. This is also referred to as capacity development in the IMF.
5. The IMF and World Bank are important partners in the G20 cross-border payments program. The two institutions participated in the development and design of the Roadmap and they have engaged actively in several building blocks (BBs). They have played an important role as the voice of non-G20 countries in the program, bringing the perspectives of EMDE countries to the table during the initial phase of the work. This has continued with the next phase with a focus on the IMF and World Bank using TA to help take forward the priority themes while remaining active in the various Roadmap groups taking forward other actions. The World Bank further is an important source of data, through the use of the Remittance Prices Worldwide (RPW) database, Global Payment Systems Survey (GPSS), Global Findex, and Enterprise Surveys for monitoring progress towards the targets.
6. This paper outlines the approach the IMF and World Bank have taken and will take to provide cross-border payments TA. It benefits from the findings of a coordinated stocktake conducted by the IMF and World Bank. This analysis examined relevant ongoing and planned TA in both organizations. The paper will go through the TA priorities identified, how the IMF and World Bank can coordinate and cooperate on cross-border payments TA, and the planned outreach for members of both institutions on cross-border payments TA.3
A. Basic Definitions of Capacity Development at the IMF and Technical Assistance at the World Bank
7. At the IMF, what is referred to as TA in this paper is called capacity development (CD), which is a core mandate of the IMF and accounts for nearly a third of its budget. 4 The IMF shares its knowledge with government institutions such as finance ministries, central banks, and national statistics offices through hands-on advice, training, and peer-to-peer learning. Expert advice can be delivered in-person and from headquarters or online/virtually. CD can be delivered to countries in various ways:
• IMF staff offer bilateral and customized CD to member countries both in-country and remotely from headquarters. Such visits are focused on targeted issues and initiated at the request of the member country; the staff may stay in-country for a short period or be based for a long period in an agency, depending on the country authority’s request.
• A network of the IMF’s regional capacity development centers provides hands-on regional support to countries under the guidance of headquarters. These centers foster regional
3 See Joint Statement of the IMF Managing Director and the World Bank President on Enhancing IMF-World Bank collaboration, available at https://www.worldbank.org/en/news/statement/2023/09/07/enhancing-imf-world-bankcollaboration
integration, allow for better tailoring of knowledge sharing to the needs of a region, and facilitate an enhanced ability to respond quickly to emerging needs.
• In-person and online training for government officials on targeted macroeconomic and financial topics. Online training is also provided to the general public through open online courses in partnership with edX.5
• The IMF continuously provides CD and training support to member countries on data collection that can be used to compile external sector statistics. This includes cross-border payment systems which have the potential to provide statistical information on cross-border transactions.
• The IMF’s Financial Access Survey, launched in 2009, is a unique database on access and use of financial services. It aims to support policymakers to measure and monitor payments and financial inclusion including access to banking and financial services. It covers 189 economies, with 121 data series and historical data from 2004. 6
8. The World Bank provides a suite of financial products and technical advice and analysis to help countries build sound, resilient and inclusive financial systems. World Bank TA encompasses analytics, advisory, hands-on support in the implementation of reforms, knowledge and convening services. The World Bank brings together multidisciplinary expertise, public and private sector7 partners, multilateral institutions, and the global development community to strengthen the impact of TA and mobilize resources. TA also informs and could accompany World Bank financing.
• At country/project level, the World Bank works with governments, central banks and financial sector authorities to develop and deliver TA programs tailored to each country’s needs. The World Bank supports regional integration by providing TA to regional organizations and member countries as well as through convening. TA outputs include assessments, policy notes, strategies, legal/regulatory advice, technical documents, toolkits, workshops and trainings, among others.
• Globally, the World Bank provides data, knowledge and convening services to monitor and accelerate progress towards shared goals. For instance, RPW8 is the only global source of comparable data on the cost of remittances. The World Bank develops global knowledge products and guidance that help national central banks and financial regulators in the
5 https://www.edx.org/school/imfx
7 The private sector-focused arm of the World Bank – the International Finance Corporation (IFC) – invests in private sector players, including fintech companies and banks, and provides TA to the private sector on new products/technologies including on payments. In this paper, TA is intended for central banks and other financial sector regulators. As such, this note covers World Bank TA, while acknowledging important synergies with IFC work.
framework of country reforms9 and works with standard setting bodies (SSBs) and international fora to develop and update international standards and recommendations.10 The World Bank leads the Global Remittances Working Group (GRWG) and coordinates global calls to action for reducing remittance costs and increasing financial inclusion. Flagship events such as the Global Payments Weeks (GPW) enable dissemination of global knowledge and best practices.
B. Current Approaches to TA at the IMF and World Bank
9. Both the IMF and the World Bank have significant experience in providing TA, covering a wide range of jurisdictions. Each institution has established governmental, public sector and nonprofit connections. The IMF and World Bank’s approaches to TA have certain similarities but each also has certain specific focus areas.
10. The most prominent common attributes are:
• Both institutions operate independently in selecting TA recipients, obtaining approval, anchoring governance standards, prioritizing requirements, raising funds, seeking comments on their advice, and reporting to financing partners.
• TA is demand-driven, agreed with, and requested by the recipient country’s financial sector authorities. TA can be provided stand-alone or, in the case of the World Bank, to inform or complement existing investment projects or development policy financing.
• TA can be funded from the IMF or World Bank budget or by external financing partners (nonprofit organizations, governments or governmental agencies). World Bank TA can additionally be funded as part of a financing operation or in the form of reimbursable advisory services.
C. IMF’s Surveillance and World Bank’s Development Work
11. Cross-border payments TA relates closely to other work of the IMF and World Bank. This includes other types of TA and surveillance (Article IV consultations, IMF-World Bank FSAPs) and financial sector development projects. Recommendations and lessons from cross-border payments TA could, for example, provide useful inputs to policy dialogue of IMF country surveillance work and
9 See https://www.worldbank.org/en/topic/paymentsystemsremittances#2 and https://www.worldbank.org/en/topic/financialmarketintegrity/brief/national-money-laundering-and-terroristfinancing-risk-assessment-toolkit-disclaimer-and-terms-ofuse#:~:text=The%20National%20Money%20Laundering%2FTerrorist,laundering%20and%20terrorist%20financing%20 risks
10 Examples of the latter work include the 2007 CPSS-World Bank General Principles for International Remittances (GPs), the CPMI-World Bank reports on the payment aspects of financial inclusion (2016, 2020), and the G20 HighLevel Principles for Digital Financial Inclusion (2016). The World Bank contributes to the development, dissemination, and assessment of international standards and guidance (e.g., CPMI-IOSCO Principles for Financial Market Infrastructures, FATF standards and guidance), through the FSAP, TA and trainings.
World Bank country partnership frameworks and operations, which in turn could further support cross-border payments TA.
12. The IMF and World Bank’s involvement in the design and implementation of the G20 cross-border payments program highlights the key role both institutions play in policy development and the work of the SSBs. Leveraging extensive surveillance and TA work, the IMF and the World Bank contribute to the development of policy programs such as the G20 Roadmap. This has included actively contributing to the development of recommendations, principles, and guidance for cross-border payments by the SSBs. Their broad membership, cross-country perspectives, and expertise built up over many years allow for important support to the FSB and CPMI as well as other SSBs. This assistance continues after policies are finalized and published. For instance, it includes support with promotion and implementation of this work among IMF and World Bank member countries, and assessments of the effectiveness of this implementation.11
D. Importance of TA to Achieve the G20 Roadmap Targets
13. The targets for the Roadmap were purposefully set at a global level but require coordinated action at the level of each jurisdiction. The targets were designed to be directly related to the challenges, provide a clear indication of the extent of progress, be appropriately ambitious, be able to be readily communicated, and be meaningful to a wide range of stakeholders.
14. The data gathered for the wholesale, retail, and remittances segments and published in the FSB’s first annual KPI monitoring report12 are broad and provide only a general picture. The retail segment in particular is highly heterogeneous in terms of end-users, service providers, and payment mechanisms, which makes aggregating and standardizing representative data to cover this market segment particularly challenging. The remittances segment is considered to be payments mainly sent to EMDEs.
15. Customized TA is critical to address countries’ specific challenges to also help achieve the global targets. For example, as regards remittance costs, according to RPW, the global average cost of sending $200 and $500 remittances in Q1 2023 is 6.3 percent ($12.50) and 4.3 percent ($21.65), respectively. However, as Figure 1 illustrates, the costs of some corridors are multiple times of this average cost, particularly for inter-EMDE corridors in Sub-Saharan Africa. The drivers of these costs are outlined in Box 1. While drivers of remittance costs are manifold, World Bank analysis suggests that digital financial services, supported by enabling reforms, can bring down remittance costs. TA can help recipient country authorities strengthen their analytical capacity to identify the main pain points behind the high cost of cross-border payments, craft policies to address those frictions and propose legislative and regulatory changes and develop a plan to implement those policies.
11 For example, encouraging observance of the CPMI-IOSCO Principles for Financial Market Infrastructures (PFMI).
Box 1. Drivers of Remittance Costs and the Role of Digital Financial Service Providers
Based on the data from the RPW database, the World Bank has conducted an analysis on the drivers of the cost of remittances and examined the role of digital services in bringing down remittance costs charged by non-bank providers. The analysis focuses on the correlates of remittance costs across corridors, considering the different components of the average cost of sending $200 as different dependent variables.
There is a negative relationship between the availability of services offered by digital money transfer operators (MTOs) and the average cost of sending $200 at the corridor level and its component associated with transfer fees. That is, a larger share of services offered by digital MTOs is associated with lower average costs and lower transfer fees. The analysis also indicates that more developed infrastructure and enabling legal and regulatory frameworks for payments in the sender jurisdiction are associated with lower average cost of sending remittances as well as average fees. According to the World Bank, the existence of restrictions on outward person-to-person (P2P) transfers imposed by the sending jurisdiction is linked to higher average cost and higher average fee of sending $200, potentially acting as a barrier. Lastly, floating exchange rate regime in the sending jurisdiction is found to be related to higher average foreign exchange margins, likely due to higher uncertainties about the exchange rates compared to fixed regimes.
A higher gross domestic product per capita of the destination country is associated with higher average cost, while larger destination jurisdiction population is associated with lower costs. While the former may be an indicator of how income affects the price charged for the service, the latter is related to the scale. The existence of restrictions on inward P2P transfers by the receiving jurisdiction is found to be associated with lower cost of remittances. This could potentially be due to remittance service providers (RSPs) providing incentives by lowering their fees (and hence, enabling a lower average cost) in response to such restrictions for marketing purposes. Lastly, while floating exchange rate regime in the receiving jurisdiction does not have any statistically significant relationship to the cost, the existence of a currency union in the receiving jurisdiction is associated with lower average foreign exchange margins, while raising the average transfer fees.
Source: Didier Brandao, Tatiana; Feyen, Erik H.B.; Llovet Montanes, Ruth; Ardic Alper, Oya Pinar (2022). Global Patterns of Fintech Activity and Enabling Factors: Fintech and the Future of Finance Flagship Technical Note (English). Washington, D.C.: World Bank Group. http://documents.worldbank.org/curated/en/099735504212234006/P1730060695b370090908c0bf80ed 27eba6
SUMMARY OF THE IMF STOCKTAKE
16. In March and April 2023, the IMF conducted a stocktake of relevant recent and ongoing TA covering the period early 2021 to April 2023. The stocktake aimed to identify TA priorities and opportunities to support cross-border payments. The stocktake was broad, encompassing missions that included a cross-border payments aspect even if it was not the sole focus. Missions identified included individual bilateral country TA, regional seminars, workshops, and training. TA took place on two of the three priority themes (payment system interoperability and legal regulatory and supervisory frameworks) with no missions on the third priority theme (data exchange and messaging standards). TA on legal, regulatory, and supervisory frameworks represent half of the TA offered in relation to the priority themes. Over a third of missions were on additional focus areas, mainly on CBDC exploration and crypto assets regulation (Figure 2). To date, TA has not been specifically purposed to contribute to reaching the Roadmap targets. The IMF is increasing its capacity under the remit of the Digital Money Strategy which gives the institution a mandate to ensure that digital money fosters domestic and international economic and financial stability (IMF 2021). Cross-border payments is a high priority for the IMF. Annex 1 provides a detailed summary of the findings of this stocktake.
SUMMARY OF THE WORLD BANK STOCKTAKE
17. The World Bank provides extensive payment system TA covering both domestic and cross-border payments within a holistic approach to payment system development. Safe, reliable, and efficient payment systems are instrumental to the World Bank’s mission statement to end extreme poverty and boost prosperity on a livable planet to and to help achieve the Sustainable Development Goals (SDGs). Recognizing the potential impact of remittance cost reductions on these objectives, the World Bank has been supporting countries to improve remittance markets through remittances TA while increasingly embedding cross-border payments in the broader national payments system (NPS) development TA. Cross-border payments also sit at the intersection of other World Bank TA programs, such as AML/CFT TA, and benefit from synergies with other sectors and themes, such as private sector development, digital development, including digital ID and data protection, among others. Figure 3 shows the distribution of World Bank projects in FY22-23 (from July 2021 to June 2023), grouped by workstream, across the G20 Roadmap’s priority themes The current approach provides a basis for more extensive and tailored support on cross-border aspects, in line with the prioritized Roadmap. Annex 1 provides a detailed summary of the findings of the World Bank stocktake.
THE IMF TA APPROACH: FOCUS AREAS AND DELIVERY IN 2024/25
18. Based on the outcome of the stocktake and analysis of the updated Roadmap actions, the IMF has identified ten focus areas. Under each focus area, the IMF has outlined what will be covered. This will allow for effective coordination and cooperation with the World Bank while minimizing duplication of efforts.13 Six of the focus areas fall under the remit of the Monetary and Capital Markets Department (MCM) of the IMF, and the remaining four fall under the IMF Legal
19. Department (LEG). Both departments will coordinate with regard to the focus areas.14 Hiring new IMF staff and collaboration with outside organizations (e.g., leveraging the expertise of CPMI and FSB members) will be required. Table 1 shows the focus areas under each lead department and which actions of the new Roadmap they relate to.
20. The TA focus areas will directly help countries and regions in the near term to build capacity to tackle market frictions that are directly relevant for the Roadmap targets. For example, access to payment systems, interlinking of fast payment systems and consistent application of AML/CFT rules have often been highlighted by stakeholders as ways to address the significant pain points that exist for cross-border payments. TA on the focus areas identified by the IMF will be especially helpful to those EMDE corridors where cross-border payment issues are particularly acute. Several of the focus areas, such as access to payment systems, CBDC, and crypto-assets, will likely also indirectly impact the level and volatility of cross-border capital flows by improving the overall cross-border payments infrastructure. Widespread implementation of the IMF best practices on liberalization and management of capital flows (IMF 2022b) will be important to deal with the contingencies that this impact will have on capital flows.
13 By identifying specific focus areas, the IMF and World Bank can clarify their respective contributions to each focus area in accordance with their mandates, expertise, and capacities to avoid duplication and enhance complementarities.
14 The delineation of focus areas between MCM and LEG (as indicated in Table 1) is meant only to indicate the department that typically leads each focus area. MCM and LEG will collaborate closely to work on these focus areas. For instance, LEG may also work on access to payment systems and interlinking payment systems, CBDC, and crypto assets, and MCM will support the work on safe payment corridors.
21. Three focus areas—CBDC, regulation of crypto-assets, and safe payment corridors — are not included among the three priority themes given they are unlikely to have the shortterm impact necessary to reach the target date of end-2027. However, these three focus areas are critical to the evolution of cross-border payments in the long term. The prospect of alternative payment rails in the future will provide additional incentives to industry participants to address frictions in the legacy systems. Moreover, the G20 workplan for a new Data Gaps Initiative (DGI-3) could involve statistics TA with countries on CBDC and crypto-assets used as means of payment under Recommendation 11 on digital money.15
22. Legal and regulatory aspects of cross-border payments will be an important element of TA going forward while maintaining their safety, security and integrity will be paramount. The stocktake indicated much of the current cross-border payments TA is taking place in the context of national/domestic payment system reform or as part of legal and design considerations for CBDC. This work paves the way for further engagement on legal and regulatory issues that are relevant for cross-border payments. Examples include: (i) addressing legal uncertainties and settlement finality in cross-border payments, (ii) conflict of laws issues, (iii) enforcement rules on multiple payment systems (and participants) by different jurisdictions (including enforcement of collateral), and (iv) harmonizing the relevant laws (e.g., different prudential and licensing rules applicable to participants in the payment system).
23. TA will make extensive use of outreach, training, and workshops, both bilateral with individual member countries and regionally. The IMF will inform and promote usage of the frameworks, guidance and principles developed under the Roadmap, such as CPMI’s access policies to key payment systems. The IMF can use groups such as the CPMI’s community of practice to learn from exchange of information and experiences among member central banks on TA missions. The IMF can also share experiences from TA conducted on this topic with Roadmap groups with expressed permission from recipient countries.
A. Priority Theme 1 (Payment System Interoperability and Extension)
24. Access to payment systems is the first focus area. Improving direct access to payment systems by banks, non-banks and payment infrastructures can allow cross-border payment services to be provided safely and efficiently. It can level the playing field for non-bank payment service providers (PSPs), fostering greater competition and innovation while also reducing the number of intermediaries in transaction chains. In May 2022, the CPMI published a best practices framework (CPMI 2022b) for self-assessment of access policies to key payment systems. The IMF will assist member countries in conducting a self-assessment of access policies to key payment systems in their jurisdiction. The self-assessment can bring together stakeholders (e.g., payment system operators) to engage with authorities to evaluate risks and barriers of expanding direct access to key payment systems.
25. Extending and aligning operating hours of key payment systems to allow overlapping is the second focus area. Limited operating hours of key payment infrastructures that facilitate cross-border payments, particularly real-time gross settlement (RTGS) systems, constrain the times when payments can be processed. This can lead to increased liquidity costs and settlement risks for those executing the payment, and to delays for end users receiving payment. In May 2022, the CPMI published a report (CPMI 2022a) setting out the opportunities, risks, and policy implications of three potential scenarios for extending RTGS operating hours. The IMF will assist member countries and provide guidance in considering the most suitable end state for their jurisdictions, while taking into account the “global settlement window” concept.16 The IMF will also provide training and workshops at regional level while not explicitly endorsing any of the three end states, which are: (i) an increase in operating hours on current operating days, (ii) inclusion of current non-operating days (usually weekends and holidays) and (iii) full 24/7 operations.
26. Interlinking of payment systems is the third focus area. The IMF will provide support at bilateral and multilateral levels on FPS interlinking initiatives. Interlinking arrangements for fast payment systems (FPS) allow banks and other PSPs to transact with each other without requiring them to participate in the same payment system or use intermediaries (e.g., correspondent banks). Such arrangements can shorten transaction chains, reduce overall costs and increase the transparency and speed of payments. When providing bilateral TA on linking of FPS, the IMF will also act as the coordinator between country recipients of TA and those countries they wish to establish links with, including advanced economies (AEs). At a multilateral level, the IMF will provide training and workshops in conjunction with the CPMI and the BIS Innovation Hub (BISIH). These workshops will share practical experiences of FPS interlinking and developments in Project Nexus.
16 The global settlement window is the period when the largest number of RTGS systems simultaneously operate. At present, this is considered to be the time period from 06:00 to 11:00 Greenwich Mean Time (GMT) on working days.
B. Priority Theme 2 (Legal, Regulatory, and Supervisory Frameworks)
27. Application of AML/CFT rules is the fourth focus area. Work under this focus area will center on the promotion of an efficient legal, regulatory, and supervisory environment for crossborder payments while maintaining their safety, security, and integrity, including in the area of AML/CFT.17 The IMF has an extensive, long-standing capacity development program through which it helps countries strengthen their legal, regulatory, and AML/CFT supervisory frameworks in line with the (Financial Action Task Force) FATF standards. 18 The IMF provides support to its members to help them develop and implement sound and effective risk-based supervisory frameworks, which can contribute to easing correspondent banking relationships pressures and facilitating cross-border payments. The IMF also plays a key role in supporting countries in their efforts to increase access to up-to-date and accurate information on the beneficial ownership of legal persons and arrangements. To that effect, the IMF has released a Guide to Beneficial Ownership Transparency (IMF 2022a) that is designed to provide helpful and accessible guidance to member countries as they look to increase transparency of beneficial ownership information. The IMF will continue to actively support the FATF’s efforts to increase compliance with the travel rule and support countries as they explore the use of technology to strengthen the effective implementation of AML/CFT standards. Lastly, the IMF will also continue to provide regional training on financial integrity issues related to cross-border payments.
28. Access to payment systems (non-banks) is the fifth focus area. Improving consistency of bank and non-bank regulation and supervision is a key element of the priority theme on legal, regulatory, and supervisory frameworks. Strengthening consistency of the application of regulation and supervision to banks and non-banks providing cross-border payment services in a way that is proportional to their respective risks can result in safer and more efficient cross-border payment services. Reducing disproportionate barriers for non-bank payment service providers’ access to payment systems deserves careful consideration. The IMF will assist member countries in evaluating potential amendments to make their legal and regulatory frameworks consistent with the FSB and CPMI recommendations. The IMF will assist national authorities to evaluate potential changes to their legal and regulatory framework to strengthen the consistency of the application of regulation and supervision to banks and non-banks providing cross-border payment services. It will also assist authorities to reduce legal or regulatory barriers to non-bank payment service providers’ participation in the payment system. The IMF will raise awareness and promote understanding of the FSB recommendations, and other international standards and guidance, in its capacity development activities that include bilateral technical assistance, regional seminars, workshops, and training.
17 Inconsistent implementation of AML/CFT controls, including customer due diligence (CDD) requirements across jurisdictions can be a source of frictions that reduce the speed and increase the cost of cross-border payments. Against this background, one of the priority themes includes updating the application of AML/CFT rules. Specifically, it comprises: (a) the FATF work to enhance its rules on wire transfers; (b) promoting the risk-based approach to the implementation of the FATF standards; (c) enhancing the transparency of beneficial ownership; (d) implementing the FATF travel rule and (e) exploring the use of technology in AML/CFT efforts.
18 For instance, the FATF in 2021 released updated guidance for a risk-based approach with respect to virtual assets and virtual asset service providers (see FATF 2021). https://www.fatf-gafi.org/content/dam/fatfgafi/guidance/Updated-Guidance-VA-VASP.pdf.coredownload.inline.pdf
29. Adoption of ISO 20022 (enhancing the FATF wire transfers rules) is the sixth focus area. ISO 20022 is a common messaging standard for the financial industry, allowing payment systems to share data, particularly across borders, with richer and more structured data information. The adoption of common message formats can play a significant role in payment system interoperability and can provide additional efficiency gains through enabling fully automated straight through processing. The FATF, considering amendments to Recommendation 16 on wire transfers, 19 to reflect changes in substance and terminology made with the introduction of ISO 20022 messaging standards. These amendments ultimately aim at improving the consistency and usability of message data in cross-border payments and facilitating more efficient AML/CFT checks. Once adopted, these new requirements will be included in relevant IMF technical assistance on AML/CFT efforts (such as, for example, ongoing and upcoming projects related to implementation of CDD and record keeping requirements, financial flows analysis, risk-based AML/CFT supervision and legal drafting modules).
C. Priority Theme 3 (Data Exchange and Messaging Standards)
30. Harmonized ISO 20022 (for cross-border payments) is the seventh focus area. The IMF will promote the adoption of the ISO 20022 requirements for cross-border payments. Regional outreach can assist in consistently implementing ISO 20022 globally once it is developed and agreed following the CPMI consultation (CPMI 2023). Authorities will be encouraged to consider the harmonized version of the ISO 20022 standard in their migration plans. The IMF will provide technical support to member countries who look for assistance in migrating to ISO 20022 in their jurisdictions and also at a regional level. Conversations and discussions will be facilitated involving stakeholders, relevant authorities and other interested parties.
D. Additional Focus Areas
CBDC
31. Central Bank Digital Currencies (CBDC) is the eighth focus area. The level of global interest in CBDCs is unprecedented, with retail CBDC issuance being explored in over 100 countries. Demand from IMF member countries for CD in the area of CBDC has, as a result, increased sharply. The IMF is uniquely well-placed to offer advice to countries across different regions and income groups. Over 40 requests for assistance from low-income and emerging market economies across all regions have been received since 2020, with more anticipated. The IMF has focused on facilitating peer learning and to act as trusted advisors to country authorities, considering how to think about CBDC rather than whether they should pursue CBDC. Over the past two years, cross-border payment efficiency has become an important motivation for CBDC work in EMDEs in particular. Retail CBDC,
19 The FATF Recommendation 16 aims to ensure that countries collect basic information on the originator and beneficiary of wire transfers (both domestic and cross-border) notably to enable the implementation of AML/CFT preventive measures.
though being explored by only a few countries for cross-border use for now, have the greatest potential impact on EMDE cross-border remittances. In July 2022, the CPMI in collaboration with the BIS Innovation Hub (BISIH), IMF, and World Bank issued a report (CPMI-BISIH-IMF-World Bank 2022) that identified and analyzed options for access to and interoperability of CBDC that could improve cross-border payments.
32. In April 2023, the IMF published a paper sketching out a multi-year strategy to address frequently asked questions related to CBDC and outlining the process of developing a CBDC Handbook (IMF 2023b). The CBDC Handbook will form the basis for CD engagement and a reference for policymakers and central bank experts, particularly in EMDEs. It will be a significant undertaking, with about 20 chapters envisaged over the next four to five years. Chapters will be produced or updated each year. The Handbook will consider the opportunities and risks associated with CBDC, including cross-border usage and potential designs for cross-border payments. More broadly, CD engagement on CBDC will also help member countries analyze macro-financial implications of various design choices, facilitate the interoperability of CBDC, and help ensure that the international payment system will remain integrated in the digital age (IMF 2023c).
Crypto Assets
33. Crypto-assets is the ninth focus area. The international community has been closely monitoring developments in crypto assets, including stablecoins. Amongst the many workstreams in this area, the IMF and the FSB have advanced policy and regulatory recommendations to identify and respond to macroeconomic and financial stability risks associated with crypto assets. The IMF has outlined key elements of an appropriate policy response including macroeconomic, legal, and financial integrity considerations and implications for monetary and fiscal policies (IMF 2023a). In parallel, FATF, FSB, and other SSBs have included recommendations on regulation and supervision in international standards to address risks to financial stability, financial integrity, market integrity, prudential, and other areas posed by crypto-assets (FSB 2023b).
Safe Payment Corridors
35. Safe payment corridors is the tenth focus area. Safe payment corridors aim to reduce the cost of remittances, de-risking, and correspondent banking relationship pressures in lower money laundering / terrorist financing (ML/TF) corridors by decreasing the compliance and regulatory costs for remittance service and their banks. In September 2021 the IMF and World Bank published A Draft Framework for Money Laundering/Terrorist Financing Risk Assessment of a Remittance Corridor (IMFWorld Bank 2021). This draft methodology was further promoted at the 2022 IMF-World Bank Annual meetings.20
36. Following the publication of the framework, the IMF has initiated outreach efforts to raise awareness about the benefits of implementing the safe payment corridors methodology. It has offered support to member countries willing to volunteer to its pilot implementation. The IMF will continue its outreach efforts to encourage countries to implement safe payment corridors, focusing on establishing pilot risk assessments for likely lower ML/TF risk corridors. As implementation of the second action on pilot safe payment corridors depends on the volunteer country uptake, the timeline is uncertain.
E. TA Delivery by the IMF in 2024–25
37. TA will need to be delivered on cross-border payments in the near term to have a meaningful impact on the achievement of the Roadmap targets by the target date of 2027. This includes outreach on specific topics to raise member awareness about TA on particular focus areas, international work that will be important for TA and a commitment to re-evaluate internally those areas not currently considered TA priorities in 2025.
38. First, the IMF will identify and target TA to regions where cross-border payment TA is most needed and most valuable.21 This will be done by examining three areas: (1) regions currently underserved by TA as identified through the stocktake; (2) regions highlighted as lagging in the FSB’s annual updates on progress made toward achieving the targets using regional breakdowns of the global Key Performance Indicators (FSB 2022) where available; and (3) high-cost country corridors according to the World Bank RPW database.22
39. Second, awareness will need to be raised for countries to know what TA is being offered by the IMF. This will be done through targeted outreach events at the IMF-World Bank Spring and Annual Meetings in 2024 and 2025 and other channels. Promotion of cross-border payments TA success stories and through country testimonials in relevant publications such as the IMF MCM Technical Assistance Annual Report (IMF 2023d) will encourage countries to request TA.
20 https://www.imfconnect.org/content/imf/en/annual-meetings/calendar/open/2022/10/14/168391.html
21 Contribution to TA from the IMF Legal Department (LEG) is subject to availability of funds and discussions with external donors.
40. Third, the IMF will continue to actively contribute to international work that will be important for the TA focus areas. In particular, this includes the third focus area on interlinking of payment systems (Interim report to the G20 on FPS interlinking governance, risk management, and oversight considerations (due Oct 2023)) and the sixth and seventh focus areas on aspects of harmonized ISO 20022 (development of harmonized global ISO formats for cross-border payments (due October 2023) and alignment of market practice guidelines (by July 2024)).
41. Fourth, the IMF will summarize and analyze experiences of cross-border payments TA. This will include creating a repository of information through gathering of experiences, analysis and lessons from the field related to the Roadmap as well as staff publications. Training materials from workshops will also be collected, and good practices on TA focus areas arising from TA mission experiences will be gathered and disseminated.
42. Finally, the TA approach and Roadmap priority actions will be re-evaluated internally in 2025. The approach in general will be re-evaluated based on experiences and lessons learned of the first two years of its implementation. Focus will be given to priority actions for which insufficient progress has been made to date to determine their suitability for TA. These actions relate to: (1) international guidance and principles/regulatory, supervisory and oversight frameworks; (2) APIs; (3) unique identifiers; and (4) service level agreements. As the Roadmap is designed to be flexible and adaptable over time to take account of the progress of work and the evolution of the crossborder payments landscape, so should the IMF’s TA approach.
43. Developments outside the priority actions, particularly in cross-border multilateral platform designs, will also be considered for their suitability for TA. Much work is ongoing on multilateral platforms, i.e., cross-border payment systems that are multi-jurisdictional by design. For example, a joint report released by the CPMI, BISIH, IMF, and World Bank identified the challenges to address and approaches to establishing a multilateral platform (see CPMI-BISIH-IMF-World Bank 2023). Progress on this topic and others will be carefully monitored and assessed for potential TA provision in the near term.
THE WORLD BANK APPROACH: STRENGTHENING TA LINKS TO THE G20 ROADMAP
44. The World Bank’s cross-border payments TA approach adopts the Roadmap’s priority themes and identifies opportunities for TA to strengthen the impact of each theme. This approach envisages using and adapting consolidated TA programs to advance the Roadmap’s objectives by embedding new guidance, tools, and best practices in the World Bank’s TA delivery. By upgrading key infrastructure and strengthening and aligning institutional, legal, and regulatory underpinnings, TA is expected to directly impact the priority themes. World Bank’s strategic initiatives such as Project FASTT allow building on domestic FPS foundations to create interlinking opportunities and enabling the same frictionless experience on a broader scale. Through this approach, TA also aims at increasing countries’ preparedness to onboard future multilateral initiatives on cross-border payments.
45. The World Bank cross-border payments TA approach is premised on the foundational work on payment system development. In the last 15 years, the World Bank has supported payment systems reforms in 120 countries through a range of financing and technical advice products and services. Payment system TA popularized a holistic approach to NPS development. Through this approach, NPS TA allows addressing the factors leading to cross-border payment frictions (e.g., related to incomplete or inadequate regulatory frameworks and payment system design) at domestic level, thereby directly contributing to the G20 Roadmap’s objectives. In addition to NPS TA, World Bank TA incorporates cross-border aspects and the G20 Roadmap’s considerations in other long-standing programs such as AML/CFT TA and Identification for Development (ID4D).
46. Global knowledge and convening activities will continue to play an instrumental role in cross-border payments TA. The World Bank will adapt its global knowledge agenda to integrate and put cross-border aspects at the forefront of payment system knowledge creation and dissemination. World Bank’s convening activities provide a tested platform for sharing countries’ experiences, foster coordination, raise awareness, and instigate action on global commitments.
47. In light of the above, the World Bank approach aims to both ensure continuity and to strengthen TA links to the G20 Roadmap. This section presents the World Bank approach to crossborder payments TA through the lens of the Roadmap’s priority themes although in practice, World Bank TA programs often cut across these themes. In keeping with this presentation, this section also outlines further actions complementing the priority themes, and global knowledge and convening activities. From a World Bank’s perspective, these actions/activities are equally important to deliver a holistic and forward-looking TA.
48. It is important to note that this approach will be delivered through established country engagement frameworks and funding mechanisms. These frameworks/mechanisms have enabled the World Bank to develop an extensive payment system TA portfolio (approximately 80 countries supported each year, across all regions). They also have built-in flexibility to steer resources in line with the World Bank global engagements, including the G20 Roadmap, and conduct regular evaluation and review. Priority Theme 1 (Payment System Interoperability and Extension)
49. The World Bank will continue incorporating critical enablers of cross-border payments in the design, development and/or procurement of new/upgraded RTGS and other payment systems. Examples of these enablers include non-bank access, extended operating hours, and international communication standards (ISO 20022), among others. In this context, the World Bank will incorporate the assessment of operational, policy considerations, and risks of extending operating hours based on building block 12 report, and the dissemination and implementation of technical and operational approaches to overcome identified challenges (in line with Action 1c of the Roadmap). The World Bank will apply the CPMI best practices framework for the self-assessment of access policies to key payment systems in the context of NPS TA (in line with Action 1c of the Roadmap).
50. The World Bank will scale up TA on fast payments through Project FASTT. Project FASTT aims at accelerating adoption of fast payments designed to foster and enable financial inclusion in low- and middle-income countries, including in continental Africa, and low-income South Asian countries. Over the next 3-5 years, this program will support knowledge creation and dissemination, capacity building of central bank and FPS operators, and TA on FPS design and implementation, including aspects relating to regulation, oversight, governance, and technology. This program directly supports priority theme 1 by: (i) supporting central banks’/FPS operators’ preparedness for interlinking through appropriate FPS design; (ii) identifying interlinking opportunities, supporting the development of a business case, and preparing requirements for interlinking as well as providing implementation support; (iii) producing global knowledge products on technical aspects of relevance to interlinking. Project FASTT, ID4D, and G2Px23 are also actively involved in global and country initiatives on DPI. DPI was endorsed as a priority by G20 Leaders at the New Delhi Summit in September 2023.24 With guidance from the G20 India Presidency, the World Bank developed the Global Partnership for Financial Inclusion (GPFI) G20 Policy Recommendations for Advancing Financial Inclusion and Productivity Gains Through Digital Public Infrastructure (World Bank, 2023). 25
51. The World Bank will review the guidelines on regional integration of financial infrastructures (World Bank 2014). This framework would benefit from recent experience and forthcoming guidance on interlinking and multilateral platforms. The revised guidelines will be used in the context of World Bank’s regional integration TA projects and to guide regional fora deliberations and feasibility analyses.
A. Priority Theme 2 (Legal, Regulatory, and Supervisory Frameworks)
52. The World Bank will strengthen TA links to priority theme 2. Through TA on legal, regulatory and supervisory frameworks, the World Bank will aim at enabling new entrants and innovative models within a level playing field and sound risk management. Examples of relevant actions include: (i) scaling up support for non-bank PSP regulation and supervision; (ii) reviewing TA framework on payments oversight and PSP supervision to incorporate recent and emerging
23 Project FASTT: https://fastpayments.worldbank.org/; ID4D: https://id4d.worldbank.org/; and G2Px: https://www.worldbank.org/en/programs/g2px
24 See G20 New Delhi Leaders’ Declaration, New Delhi, India, 9-10 September 2023, available at https://www.g20.org/content/dam/gtwenty/gtwenty_new/document/G20-New-Delhi-Leaders-Declaration.pdf
international guidance; and (iii) identifying and implementing approaches for enhancing information provided to end users, building on World Bank’s experience on remittances and financial inclusion and consumer protection TA. Furthermore, modern know-your-customer frameworks will contribute to enabling the use of digital ID in the financial sector, including for cross-border payments.
53. Through its long-standing AML/CFT TA, the World Bank will continue building countries’ capacity on risk-based regulation and supervision. This work builds on the World Bank’s extensive engagement in National Risk Assessments (114 countries thus far) and follow-up capacity building TA. In this context, the World Bank has developed a financial inclusion product risk assessment module (FIRM) to guide countries in designing low-risk financial products that may benefit from simplified AML/CFT procedures. This tool is being delivered to countries through a workshop and remote support. Despite low demand thus far for safe payment corridor pilots, the World Bank will continue raising awareness on, and assessing countries’ interest to conduct these pilots, based on the IMF-World Bank framework, and World Bank methodology (unpublished). In addition, the World Bank plans on actively supporting FATF’s revision of the Travel Rule in FATF Recommendation 16.
B. Priority Theme 3 (Cross-Border Data Exchange and Message Standards)
54. The World Bank will strengthen TA links to priority theme 3 on two fronts. One is to promote interoperability of digital ID and data exchange for cross-border payments by leveraging cross-sectoral collaboration within the World Bank. The other is to support the adoption of a harmonized version of ISO 20022 where possible through payment system TA in collaboration with other partners. Furthermore, the World Bank will work on integrating API harmonization considerations/guidance in its support for new and upgraded payment systems and open banking TA.
C. Complementary Country Support
55. The World Bank’s financial sector work in general as well as its work in other sectors to improve economic development are complementary to the actions identified above for the Roadmap. . The actions identified in this section focus on complementary financial sector TA. Box 2 below provides some insights on the cross-sectoral nature of the work of the World Bank in contributing to the achievement of the Roadmap targets.
56. The World Bank will scale up concrete actions to digitalize remittances through partnerships with central banks, financial institutions, and other public and private stakeholders at national and local/municipal level. Building on the existing work on remittances and the lessons learned from Greenback 2.0 (see Annex 1), Greenback 3.0 will focus on: (i) developing /improving digital remittance products / transaction account design to meet the needs of target populations; (ii) raising target populations’ awareness and literacy, and (iii) fostering electronic payment acceptance and the development of a digital payment ecosystem to enable recipients to make/receive digital payments. This program complements the G20 Roadmap’s
approach by covering the “last mile” through a demand-side and bottom-up approach. In FY24, the World Bank will undertake a pilot and, based on the pilot lessons, extend the tool to at least two (2) large remittance recipient markets, covering in total at least three countries.
Box 2. World Bank’s Cross-Sectoral Approach
The four challenges identified in the Roadmap are extensively related to several other development concerns, such as strengthening the private sector via digitalization of or enabling access to finance or markets by small firms, building a digital economy, financially including vulnerable and disadvantaged groups such as migrants, women and the poor, and empowering all with identification. The World Bank works on a holistic way to respond to the economic development challenges faced by emerging markets and developing economies. This holistic approach includes technical assistance coupled with project or budget support to countries on interrelated topics including financial inclusion, payment system development, private sector development, digital economy, identification systems and efficient delivery of government payments. In this regard, World Bank’s cross-sectoral approach provides opportunities for progress in relevant related areas to respond to the four challenges identified in the Roadmap. For example, digitalization of small firms can provide opportunities for them to access markets and engage in cross-border trade. Coupled with interventions on the financial sector side, this can help respond to the access challenge. Technical assistance on digital development in general would contribute to increased access to markets, potentially leading to more individuals and firms making digital cross-border payments.
57. The World Bank will develop and roll out targeted financial inclusion efforts to close remaining gaps and increase access to and usage of financial services, with a specific focus on vulnerable segments such as women and micro-, small, and medium-sized enterprises (MSMEs). This will include leveraging government-to-person (G2P) payment digitalization initiatives (under the umbrella of G2Px) to increase access and use of products that meet the needs of the recipients of government transfers, including by providing access to cross-border payment services, where relevant.
58. The World Bank will continue providing support for countries’ research agenda on innovation. World Bank support to country research agenda on these innovations provides a framing within the country context/NPS, capacity building, analytical, technology and business architecture support (see Annex 1). The World Bank will contribute to global efforts on identifying approaches to understanding the implications of CBDCs on the broader national and cross-border payment ecosystems. To this end, the World Bank will leverage its Technology and Innovation Lab.
59. The World Bank will support countries on the regulation, oversight, and supervision of crypto-assets and stablecoin arrangements in line with international standards and guidance. This TA complements priority theme 2 on legal, regulatory, and supervisory framework, and is critical to ensure that countries have adequate powers, tools and resources to effectively control cryptoasset risks and govern new forms of money and market infrastructures.
D. Global Knowledge, Data, Convening and Partnerships
60. The World Bank will review its global knowledge and data program/agenda in light of cross-border TA and the G20 Roadmap’s Priority Themes. FY24–25 knowledge program is expected to focus on knowledge gaps and/or innovative topics, such as determinants of FX margins in remittances. RPW will be enhanced through a new interactive webpage. The World Bank will continue to improve and collect relevant data for monitoring the targets of the Roadmap, including through RPW, GPSS, Global Findex and Enterprise Surveys.
61. Partnerships are instrumental in the World Bank’s TA delivery model. The World Bank will build on long-standing partnerships with international organizations, standard setting bodies, and donors to amplify the impact of TA and disseminate global knowledge. The World Bank will leverage regional partners/fora for knowledge exchange and training, e.g., AMF, CEMLA, the Southern Africa Development Community (SADC)’s Payment System Oversight Committee. Standing fora (e.g., GRWG) and recurring events (e.g., GPW), will continue offering a platform to discuss and disseminate knowledge as well as stimulate action on cross-border payment issues.
CONCLUSIONS
62. TA is critical for helping achieve the G20 cross-border payments targets by the target date of 2027. IMF and World Bank TA programs will support policy themes underpinned by their respective mandates, institutional objectives, governance and delivery mechanisms. Cross-border payments TA will remain demand-driven and will be agreed with and requested by IMF and World Bank member countries. TA will be delivered in a manner consistent with both institutions’ provision frameworks. Cross-border payments TA will require appropriate funding and the IMF26 and World Bank will explore existing and new TA funding to assist countries.
63. Collaboration and coordination are key to the successful delivery of this TA. While the IMF and World Bank are uniquely placed to provide TA, they will benefit from collaboration with the FSB, CPMI, and central banks, among others when conducting TA. These institutions can play an important role by providing technical expertise, participating in missions, presenting at regional or global workshops/conferences and contributing to analytical work. Depending on the country or countries, a coordinated approach may entail jointly delivering a product/activity or maintaining an open channel of communication to ensure consistency of their respective activities.
64. The IMF and World Bank’s TA approaches have been designed in order to fully utilize each institution’s mandates, resources and experience. Both institutions endeavor to coordinate and complement each other’s activities at country and/or project level wherever feasible, making full use of the different advantages, resources, and experience each brings.
65. TA approaches are designed to dynamically adapt to country needs and the evolution of the cross-border payments landscape as well as feed into the Roadmap’s development. The TA approaches provide a structured framework to mobilize resources towards common objectives; at the same time, they are adaptable to country demand and ensure flexibility in a fast-changing environment. The IMF plans on re-evaluating internally its capacity development approach in 2025 to ensure it remains relevant and to take account of lessons learned. On the World Bank side, a regular assessment of the TA approach will be incorporated in end- and beginning of fiscal year processes. The experiences and lessons learned in the context of IMF and World Bank TA will provide a valuable contribution to the implementation and future development of the Roadmap.
26 In the case of focus areas led by LEG, further TA activities are subject to the availability of funds and the outcome of discussions with external donors
References
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Annex I. Summary of the IMF and World Bank Stocktake
1. This annex presents the findings from the joint stocktake conducted by the IMF and the World Bank of relevant ongoing and planned TA in both organizations. The analysis of the stocktake was used to assist in the identification of TA priorities and opportunities to support cross-border payments. The stocktake covered any TA that involved cross-border payments and included any activities at individual country level as well as regional activities such as regional workshops or seminars.
Outcome of the IMF Stocktake
The IMF stocktake indicated that the majority of ongoing TA featured a domestic element. A small minority solely focused on cross-border payments (see Box 3 for an example of cross-border payments TA). TA Missions have taken place across all regions (Figure 5). TA on legal, regulatory, and supervisory frameworks represents half of the total TA offered. Requests for CBDC assistance TA commonly include exploration of cross-border use of both retail CBDC (rCBDC) and wholesale CBDC (wCBDC) to facilitate cross-border payments. The cross-border implications of CBDC and the potential of digital currencies to tackle existing pain points of cross-border payments were explored in 6 countries and two regional workshops in FY23.
2. Notably, recent or ongoing IMF TA are almost evenly split between bilateral TA missions and regional seminars/training/workshops (Figure 6). Bilateral TA has included providing assistance for modernization of domestic payment systems laws, cross border usage of CBDC, safeguarding the integrity of the financial system, and strengthening the effectiveness of AML/CFT frameworks for virtual assets and virtual asset service providers and to address ML/TF risks arising from cross-border payments. Regional seminars, workshops and training took place on topics that included wholesale and retail CBDCs for cross-border payments, cross-border use of CBDC, interlinking of FPS, legal challenges in cross-border payments, and strengthening AML/CFT frameworks for regulation of virtual assets and virtual asset service providers (including to improve the implementation of the travel rule).
• In FY23 and FY24, the IMF provided or is providing TA on addressing new entrants brought into the payment landscape by fintech such as non-bank payment service providers (and especially non-bank foreign providers of payment services) through bilateral TA in four countries; this work included amendments to the legal framework.
• The IMF has provided regional seminars in two regional training centers on legal challenges to the modernization of payment system laws and cross-border payments (e.g., legal uncertainties, laws harmonization, settlement finality and conflict of laws).
• TA on AML/CFT and related cross-border payment issues was designed to strengthen the AML/CFT legal and regulatory frameworks, strengthen risk-based supervision, address correspondent banking relationships pressures, and combat illicit financial flows. It has been provided or delivered both at a country level and regionally.
Annex I. Box 1. Cross-Border Payments TA to Member Countries of the Capacity Development Office in Thailand
The IMF conducted a one-day regional workshop on cross-border payments for the member countries of the Capacity Development Office in Thailand (CDOT). The workshop was co-hosted by the State Bank of Vietnam (SBV) in Hanoi, Vietnam during March 2023. Many central banks in the region have been engaging in several initiatives to enhance efficiencies in cross-border payments such as Fast Payment Systems (FSPs) interlinkages and multi-currency Central Bank Digital Currencies (CBDCs). The workshop primarily aimed to deepen technical understanding of cross-border payments. A series of presentations covering technological and macro-financial aspects of cross-border payments were given by the IMF staff and guest speakers from the central banks of Thailand, the Philippines, and Singapore were invited to share their hands-on experiences in cross-border payment projects.
1) IMF Presentations The IMF staff delivered three presentations, each followed by a Q&A session. The first presentation covered the recent development of cross-border payments landscape and policy implications, which included the G20 Roadmap, different models and approaches to improve cross-border payments such as Fast Payment Systems (FSPs) interlinkages and multi-currency CBDCs, macro-financial risks such as capital flow volatility and currency substitution, as well as the IMF’s conceptual blueprint of cross-border payment and contracting (XC) platforms. The second presentation discussed the potential risks to financial integrity posed by cross-border payments and CBDCs and the necessary mitigation measures. The third presentation introduced the technological and cybersecurity issues related to cross-border payments.
2) Peer-Learning The guest speakers from the three regional central banks were invited to share their latest insights on cross-border payment projects. Representatives from the Monetary Authority of Singapore (MAS) provided overview and insights to the MAS’s various crossborder payment projects including Project Nexus on FPS linkages and Project Dunbar on multicurrency CBDCs. A panel discussion was also held with speakers from the Bank of Thailand (BOT) sharing their experiences on linking Thailand and Singapore’s FPSs – PromptPay and PayNow and the Bangko Sentral ng Pilipinas (BSP) outlining cross-border payments initiatives in the Philippines. The BSP also presented on its exploration of a wholesale CBDC.
Key questions were raised and discussed during the workshop such as the management and supervision of a cross-border payment platform and appropriate measures to mitigate macro-financial risks. During the panel, all speakers stressed the necessity to collaborate with stakeholders, the central bank’s role in providing an infrastructure that could support innovation, and the multilateral coordination of policies and regulations to ensure the success of cross-border payments projects.
Outcome of the World Bank Stocktake
3. In response to Action 14a) of the revised G20 Roadmap, the World Bank undertook a stocktake of cross-border payments TA. This section summarizes the outcome of this stocktake by TA program/activity and, for each program/activity, highlights the relevance to cross-border payments and the G20 Roadmap. The stocktake highlights that World Bank TA programs provide a valid framework for incorporating cross-border considerations within a comprehensive TA approach tailored to country needs. The stocktake focuses on fiscal year 2023 (FY23).
Outcome of the World Bank Stocktake
3. In response to Action 14a) of the revised G20 Roadmap, the World Bank undertook a stocktake of cross-border payments TA. This section summarizes the outcome of this stocktake by TA program/activity and, for each program/activity, highlights the relevance to cross-border payments and the G20 Roadmap. The stocktake highlights that World Bank TA programs provide a valid framework for incorporating cross-border considerations within a comprehensive TA approach tailored to country needs. The stocktake focuses on fiscal year 2023 (FY23).
Remittances TA
4. Remittances TA is a long-established TA program within the World Bank, aimed at implementing the 2007 CPSS-World Bank General Principles (GPs). Remittances TA supports priority themes 1 and 2 by helping countries design and implement (i) regulatory reforms and frameworks for the authorization and supervision of remittance service providers (RSPs); (ii) payment schemes for cross-border retail payments and remittances; and (iii) remittance recipients’ awareness raising and financial literacy programs.
• In FY23, the World Bank provided TA in improving the market for international remittances through 19 country projects and three regional/subregional projects.
• Project Greenback27 aims at increasing the efficiency of remittances market through a demandside approach, by promoting financial literacy and awareness campaigns locally, and interacting with RSPs, with the objective of encouraging demand-driven best practices that can be applied on a national scale. Since its launch, Project Greenback has been implemented in 11 countries and remittance champion cities.28
TA on AML/CFT
5. The World Bank helps countries assess and mitigate ML/TF risks as well as build capacity for risk-based regulation and supervision. ML/TF National Risk Assessments, including assessment of ML/TF risks in the remittance sector, aim to guide countries in a risk-based approach to AML/CFT and are further complemented with capacity building. In 2023, the World Bank conducted (or is in the process of conducting) 10 assessments; thus far, 114 countries have been assessed.
6. Furthermore, the World Bank has developed FIRM to guide countries in designing lowrisk financial products that may benefit from simplified AML/CFT procedures and provides training and remote support. AML/CFT TA also supports remittance corridor solutions. In FY23, the World Bank led an initiative that explored establishing a humanitarian payment facility for Afghanistan. Earlier, a similar initiative took place in the United Kingdom-Somalia remittance corridor, ultimately leading to the establishment of payment systems in Somalia and receiving remittances digitally.29 As regards building block 7, the World Bank and IMF coauthored the framework for safe remittance corridor risk assessments; the World Bank later developed a practical methodology (unpublished draft) and is currently exploring pilots.
7. The World Bank proactively supported the integration of the risk-based approach in the FATF Recommendations, including through applying simplified customer due diligence measures in low-risk transactions. This work is directly relevant to international remittances. The World Bank has been actively involved in FATF’s technical work related to wire transfers, money and value transfer service providers, and virtual assets. The World Bank recently co-led the FATF initiative for unintended consequences of FATF standards.
National Payments System (NPS) TA
8. NPS TA supports comprehensive NPS reforms across nine pillars (see Figure 6) and underpins the domestic foundations of cross-border payments. Competing domestic priorities and a lack of (international) coordination, divergent legal and regulatory frameworks across jurisdictions, and technical differences and restrictions rooted in the design of existing domestic system are known to contribute to cross-border payment frictions.30 By addressing these issues at domestic level, NPS TA directly contributes to the Roadmap’s objectives. Compared with remittances TA, NPS TA has a broader scope, including (other) cross-border retail payments and wholesale payments. This TA supports several building blocks across all focus areas of the roadmap, and all three priority themes.
27 https://remittanceprices.worldbank.org/project-greenback-20-remittances-champion-cities
28 Washington DC, Turin, Montreuil, Malaysia, Indonesia, Albania, Kosovo, Bosnia and Herzegovina, Haiti, and Morocco. Most recent World Bank technical assistance to the Central Bank of Egypt on a pilot on digitalization of remittances (2022-2023) forms the basis of World Bank’s planned work on Project Greenback.
29 See Bareisaite, Asta. S. Goyalkarol, K. Karpinski. “New bank payment systems get money moving in Somalia”, December 2022, available at https://blogs.worldbank.org/africacan/new-bank-payment-systems-get-money-movingsomalia
In FY23, the World Bank provided TA in modernizing regulatory frameworks through 30 country projects, fostering alignment to international standards, broadening access to payment systems, and enhancing consumer protection.
• This TA supports Roadmap areas B (building blocks 4, 5 and 8), C (building blocks 10 and 13), and E (building blocks 17-19), and priority theme 2.
• For example, in Eastern Europe, the World Bank supports EU candidate and potential candidate countries in transposing the EU acquis on payment services and advancing towards SEPA readiness.
• Indonesia,31 Mexico32 and the Philippines33 are examples of how development policy financing (DPF) is used to accompany policy dialogue and/or TA to underpin broader access to payment systems for non-banks.
• In selected countries in East and South Asia, Northern Africa, Sub-Saharan Africa, and Latin America, the World Bank through NPS TA assists countries in developing new regulatory frameworks on open banking and crypto assets.
In FY23, the World Bank supported countries in developing and upgrading payments infrastructure (e.g., RTGS upgrade, FPS development) through 31 country projects. This TA aims at facilitating non-bank direct participation and tiered arrangements, extended operating hours, efficient liquidity managements, the adoption of ISO 20022, and the application of new technologies (e.g., APIs).
• These activities support Roadmap areas C (building blocks 10, 12, 13), D (building blocks 14, 15), and E (building block 17), themes 1 and 3 of the revised roadmap.
• RTGS upgrade is part of a broader focus on future-proofing the NPS in several countries across Sub-Saharan Africa, East and South Asia, Latin America and the Caribbean, and the Middle East.
• FPS implementation aims to benefit both domestic and international payments. For example, in the Western Balkans and West Africa, the World Bank supports countries in exploring interlinking arrangements and/or a common platform. The World Bank is committed to creating and sharing knowledge on FPS to help guide interested jurisdictions and published a report on considerations and lessons for the development and implementation of FPS (World Bank 2021b) as part of a broader set of resources on FPS.
30 See CPMI, “Enhancing cross-border payments: building blocks of a global roadmap Stage 2 report to the G20 – technical background report”, July 2020.
31 https://projects.worldbank.org/en/projects-operations/project-detail/P174025
32 https://projects.worldbank.org/en/projects-operations/project-detail/P178224
33 https://projects.worldbank.org/en/projects-operations/project-detail/P179361
9. NPS TA incorporates the exploration and experimentation of CBDC designs that enhance the efficiency of domestic and cross-border payments. This TA provides a framing of CBDC within the country context/NPS, capacity building, analytical, technology and business architecture support, in collaboration with the World Bank’s ITS Technology and Innovation Lab. The World Bank published a guidance note (World Bank 2021a) to be used by central banks and relevant public authorities considering the issuance of CBDC.
• Through a focus on interoperability with existing infrastructures and cross-border use cases, these activities support roadmap’s area E (building block 19), and priority theme 1.
Digital and Financial Market Integration
10. The World Bank increasingly provides cross-border payments TA as part of regional economic and financial integration projects. Integration of digital and financial markets relies on safe and efficient cross-border payments to underpin trade, including e-commerce and financial transactions across borders. The Finance, Competitiveness and Innovation Global Practice (FCI GP) leads the financial service component of these cross-sectoral and multi-jurisdictional projects. This TA focuses on (i) aligning regulatory frameworks and business practices, and (ii) developing and/or strengthening cross-border payment arrangements – from interlinking arrangements to new multilateral platforms. This TA supports all three priority areas, and is directly relevant to building blocks 13 and 17.
• In FY23, there were eight regional projects with a payments/finance component, covering parts of Sub-Saharan Africa (East, West, and Southern Africa as well as Africa-wide), the Eastern Caribbean, Western Balkans and the Pacific Islands.
• For example, the Digital Economy for Africa (DE4A) Initiative34 aims to ensure that every individual, business, and government in Africa will be digitally enabled by 2030 in support of the African Union’s “Digital Transformation Strategy for Africa.” The Africa-wide Regional Payment Platform (AWPP) is one of two goals under the Digital Financial Services (DFS) pillar of DE4A and a key component of the African Continental Free Trade Area (AfCFTA). World Bank TA supports AWPP vision and strategy formulation as well as convening, among others.
ID4D 11. Cross-border payments TA benefits from synergies with other World Bank programs, notably on digital ID and digital public infrastructure. The World Bank provides global knowledge and TA on digital ID and civil registration ecosystems through the ID4D initiative.35 Mutual recognition and interoperability of identification systems across countries is a powerful driver of faster, more efficient cross-border payments, among other objectives. These activities support priority theme 3 of the revised roadmap.
• These activities support priority themes 1 and 2 of the revised roadmap.
• In FY23, there were five regional projects and technical assistance activities on cross-border use of ID contemplating financial sector use cases including remittances, covering parts of SubSaharan Africa, ASEAN, and the South Pacific.
• The West Africa Unique Identification for Regional Integration and Inclusion (WURI) Project36 is an example of a staggered approach. The project is strengthening/harmonizing the legal and enabling environment within and between countries and upgrading/establishing robust foundational ID systems. With these building blocks in place, the project aims at promoting the use of IDs for cross-border service delivery, by creating linkages across systems that allow users to authenticate themselves for key services such as receiving social transfer payments, completing financial transactions, and labor mobility.
Global Knowledge and Convening
12. The World Bank monitors the cost of remittances and coordinates global calls to action for reducing remittance costs and increasing financial inclusion. The World Bank’s RPW database, covering 367 country corridors, is used as a reference for measuring progress towards global cost reduction objectives and targets for the cross-border payments roadmap. In addition to RPW, the World Bank manages other databases for the monitoring of the roadmap targets, including the Global Payment System Survey, Global Findex, and Enterprise Surveys.
13. Global knowledge and convening activities are instrumental to cross-border TA. In FY23, the World Bank and Bank-al-Maghrib (Central Bank of Morocco) co-organized the GPW in Marrakech, Morocco, in partnership with the CPMI, Arab Monetary Fund (AMF), and the Center for Latin American Economic and Monetary Studies (CEMLA). Central banks representing 75 jurisdictions participated in the program. The GPW program included a session dedicated to cross-border payments, and additionally featured regional meetings on topics of common interest, including cross-border payments. The GRWG meets twice annually around the Spring and Annual Meetings of the IMF/World Bank. The GRWG participants include central banks and other relevant regulators, providers, international organizations and SSBs.
Annex II. Targets for the Cross-Border Payments Roadmap1
| Challenge | Payment Sector | Wholesale | Retail | Remittances |
|---|---|---|---|---|
| Cost | No target set. | Global average cost of payment to be no more than 1%, with no corridors with costs higher than 3% by end-2027. | Reaffirm UN SDG: Global average cost of sending $200 remittance to be no more than 3% by 2030, with no corridors with costs higher than 5%. | |
| Speed | 75% of cross-border wholesale payments to be credited within one hour of payment initiation or within one hour of the pre-agreed settlement date and time for forward-dated transactions, and for the remainder of the market to be within one business day of payment initiation, by end-2027. Payments to be reconciled by end of the day on which they are credited, by end-2027. | 75% of cross-border retail payments to provide availability of funds for the recipient within one hour from the time the payment is initiated and for the remainder of the market to be within one business day of payment initiation, by end-2027. | 75% of cross-border remittance payments in every corridor to provide availability of funds for the recipient within one hour of payment initiation and for the remainder of the market to be within one business day, by end-2027. | |
| Accessibility | All financial institutions (including financial sector remittance service providers) operating in all payment corridors to have at least one option and, where applicable, more options available. | All end-users (individuals, businesses (including MSMEs), or banks) to have at least one option (i.e., at least one infrastructure or network to enable cross-border payments). | More than 90% of individuals (including those without bank accounts) who wish to send or receive remittances to have at least one option available for doing so. |
1 See FSB (2021) for details.
2 The wholesale payments are defined as payments with a value of USD 100,000 or more, while the retail payments are defined as payments with less than USD 100,000 other than remittances.
3 Access The retail market segment includes B2B, P2B/B2P and P2P other than remittances.
4 Due to the difficulty of estimating average costs across the wholesale market where transactions are typically not individually priced, a target has not been set for this segment.
5 For this purpose, a wholesale payment is considered initiated at the moment of entry into a payment infrastructure or correspondent bank as defined by their applicable rules.
6 The settlement date and time are agreed and contracted between the two counterparties of the transaction at the point the transaction is agreed. On this date and time, there will be an exchange of payments between counterparties in each of the currencies contracted for exchange.
7 In cases where the hours or dates of the business days in the locations where the initiation and receipt do not coincide, the payment should be credited within a period that, in each location, includes one business day.
8 For this purpose, a retail or remittance payment is considered initiated when the payment order is received by the payer’s payment service provider. The transaction is considered complete once the recipient can access the funds.
| Challenge | Payment Sector | Wholesale | Retail | Remittances |
|---|---|---|---|---|
| Access | All financial institutions (including financial sector remittance service providers) operating in all payment corridors to have at least one option, and where appropriate, multiple options (i.e., multiple infrastructures or providers available) for sending and receiving cross-border wholesale payments by end-2027. | All end-users (individuals, businesses (including MSMEs), or banks) to have at least one option (i.e., at least one infrastructure or provider available) for sending or receiving cross-border electronic payments by end-2027. | More than 90% of individuals (including those without bank accounts) who wish to send or receive a remittance payment to have access to a means of cross-border electronic remittance payment by end-2027. | |
| Transparency | *All payment service providers to provide at a minimum the following list of information concerning cross-border payments to payers and payees by end-2027: total transaction cost (showing all relevant charges, including sending and receiving fees including those of any intermediaries, FX rate and currency conversion charges); the expected time to deliver funds; tracking of payment status; and terms of service.* | Same as Wholesale. | Same as Wholesale. |
INDUSTRIAL POLICY COVERAGE IN IMF SURVEILLANCE
BACKGROUND PAPER III: RELEVANCE OF AML/CFT TO OTHER FUND POLICIES
