Financial market infrastructures (FMIs) include the payment systems that we use every day, as well as more specialised systems that move money, shares, bonds and other financial assets between banks and financial institutions. Some FMIs are provided by central banks as public goods, while others are provided by non-profit groups which are supervised by central banks to ensure they are safe and resilient.
In the last decade, many countries have implemented fast payment systems (FPS), which can move money between bank accounts within seconds. These FMIs increase the speed of payments within a country, but they don’t usually allow payments to other countries.
The BISIH is exploring how these FPS could be linked together to enable faster and cheaper cross-border payments. Linking payment systems together one-to-one (bilaterally) quickly becomes complex and expensive. Consequently, we are exploring the potential for a multi-lateral “bridge” which can connect multiple fast payment systems in a more scalable way.
Cross-border payments also require more checks than domestic payments, to prevent money laundering and the financing of terrorism. The BISIH is therefore also exploring how payment infrastructures could be connected to digital identity systems to improve these processes, removing friction from cross-border payments.
Read More: Next-generation FMIs