In an effort to reduce the risk of regulatory arbitrage and level the playing field between banks and other players, the Financial Stability Board (FSB) is proposing recommendations for the supervision of cross-border payments.
The FSB launched a consultation on its proposals that aim to promote consistency between bank and non-bank providers of payment services when it comes to the oversight of their provision of cross-border payments.
“Advances in technology in the cross-border payments landscape have led to an increasing number and variety of payment services providers and the services they offer,” the FSB noted.
Regulation of these services has had to adapt to these innovations without the benefit of global standards.
In response, the FSB proposes recommendations to level the playing field and reduce the risk of regulatory arbitrage by ensuring “quality and consistency in the legal, regulatory and supervisory regimes” for payment providers.
“Greater consistency in the treatment of payment services … supports an environment that reduces costs, increases delivery speed, and improves financial access and transparency,” the FSB said.
The consultation also sets out policy recommendations that aim to reduce frictions in the supervisory frameworks on data — the variety of laws, rules and regulations that apply in different markets for the collection, storage and management of data. They represent an obstacle to improving the cost, speed, transparency and accessibility of cross-border payments, the FSB said.
“These frictions include the misalignment of data in payments that interferes with the smooth processing of cross-border payments, restrictions on data sharing that impede the ability to safely process cross-border payments, and increased costs due to data storage and handling requirements,” it said.
Alongside its policy recommendations in this area, the FSB proposes creating a forum of policymakers that deal with payments, anti–money laundering rules, sanctions, and data privacy and protection, to help implement the proposals.
The FSB said the consultations are part of its work for the G20 on cross-border payments; the G20 has made faster, cheaper more inclusive payments systems a priority.
It seeks feedback on the proposals by Sept. 9.