The Bank of Canada, Bank of England and the Monetary Authority of Singapore (MAS) have jointly published a report which assesses alternative models that could enhance cross-border payments and settlements, the three central banks announced Thursday.
In addition to the banks’ collaboration, the project was supported by a group of financial institutions led by HSBC. Contributors included Toronto-Dominion Bank, Payments Canada, Oversea-Chinese Banking Corp., and United Overseas Bank.
The report, Cross-border interbank payments and settlements: Emerging opportunities for digital transformation, examines possible alternatives for improving the speed, cost and transparency of cross-border payment and settlement systems.
It looks at several payments models — two that are built on traditional technology, and a novel model that uses blockchain technology — concluding that these models could improve access, speed and transparency of cross-border payments.
However, more work is required from both the financial industry and regulators to further develop these models, the report says.
It also suggests areas for further research and experimentation including: comparinh incremental reform to holistic change; examining the possible policy implications of radical reforms; and determining the prospects for private sector innovation to make short-term improvements.
“There is significant room for improvement in the cross-border payments space. Major changes are being proposed by current service providers as well as start-ups that regulators need to research to better understand. This project was a major step forward in international co-operation and in our understanding of the possible alternatives,” says Scott Hendry, senior special director, financial technology, at the Bank of Canada, in a statement.
Alongside the three central banks, the project was supported by a group of financial institutions led by HSBC, including TD Bank, Payments Canada, Oversea-Chinese Banking Corp., and United Overseas Bank.