“Multilateral [payment] platforms could play a key role in alleviating the frictions of cross-border payments and achieving the global targets for cost, speed, transparency and access (FSB (2021)). However, risks, barriers and challenges could limit their potential or even hinder their establishment in the first place. While this report does not present a blueprint for a new multilateral platform, it provides an overview of the key considerations around establishing such a platform.
Although several multilateral platforms are in operation or in development today, most are regional in scope and may face challenges in extending their reach for a variety of reasons. This report shows that business model considerations, lack of demand for services and/or weak public sector support for establishing multilateral platforms are among the barriers that could limit multilateral platforms’ potential to enhance cross-border payments.
There are two possible approaches to increasing the role of multilateral platforms in global cross-border payments. The first approach is to extend the reach and enhance the functionality of existing regional platforms. This approach could entail broadening participation in the platform either by extending access to foreign entities or through interlinking with other domestic systems or regional platforms. The second possible approach entails developing new platforms with extended reach from the outset, leveraging the latest technology and common standards. In either case, increasing the role of multilateral platforms should consider a broad range of issues, including the types of friction that could be addressed, as well as the risks and other barriers that would need to be overcome.
Increased public sector involvement can help address some of the risks, barriers and challenges discussed in the report under both scenarios. Especially in the startup phase, a new multilateral platform will require decisive public leadership. As existing platforms evolve and new platforms emerge, platform operators and authorities are likely to face new questions about the potential of multilateral platforms and how best to harness it. Payment system innovation, such as increased adoption of FPS and the development of CBDCs, could increase the public sector’s interest and involvement in multilateral platforms.”
Source: from the BIS Committee on Payments and Market Infrastructures (CPMI), the BIS Innovation Hub, the International Monetary Fund (IMF) and the World Bank, Full Report here: Exploring multilateral platforms for cross-border payments, January 18, 2023
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