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S/FIN/M/92  
 
26 September  2017 
(17-5106) Page: 1/10 
Committee on Trade in Financial Services    
 
 REPORT OF THE MEETIN G HELD ON 13 JUNE  2017  
NOTE BY THE SECRETAR IAT1 
The Committee on Trade in Financial Services held a meeting on 13 June  2017. The agenda was 
contained in Airgram  WTO/AIR/CTFS/ 9. An annotated agenda by the Chairperson was issued p rior 
to the meeting (JOB/SERV/ 262).  
The agenda was adopted.  
1  ITEM A – APPOINTMENT OF THE C HAIRPERSON OF THE CO MMITTEE  
1.1.  The Committee elected  Mr. Khalid Jamal Alaamer, from the Kingdom of Bahrain, as its new 
Chairperson . 
2  ITEM B  – REGULATORY ISSUES IN  FINANCIAL SERVI CES  
2.1.  The Chairperson  said that, as agreed by the Committee, the Secretariat had contacted 
international standard -setting bodies to continue with the cycle of presentations on recent 
developments in international financial regulatory reform . Following those  invitations, the 
Secretariats of the Financial Stability Board (FSB) and the International Association of Insurance 
Supervisors (IAIS) had kindly agreed to make a presentation at this meeting. Links to all the 
documents produced by these two standard -setting bodies over the last two years  had been 
included in the annotated agenda . In addition, the Chairperson drew Members' attention to the 
background Note by the Secretariat on recent developments in standard -setting (S/FIN/W/90, 
dated 14 June 2016), which contained  an overview of standard -setting activities by, inter alia , the 
FSB and the IAIS between May 2014 and May 2016.  
2.2.  The first presentation was delivered by the representative of the Financial Stability Board , Mr. 
Costas Stephanou . His presentation fo cused on three issues: the FSB/G20 reform agenda ; the 
progress made so far with the implementation of reforms and the latter's effects, and finally, the 
emerging vulnerabilities.  
2.3.  The need for financial reform became evident following the recent global financial crisis, 
whose costs had been substantial. In a report last year, the FSB estimated the cumulated output 
loss as a result of the financial crisis to be equivalent to 25% of global GDP. The global economy 
was still recovering from the crisis. Economic  growth continued to recover and unemployment 
came down in advanced economies (AEs). Yet, public and private debt remained at historically 
elevated levels. Higher public debt in the AEs was one of the main legacies of the crisis, as 
increased public spendi ng helped prevent a larger drop of economic output and employment.  
2.4.  The G20 launched a comprehensive program of financial reforms post -crisis to increase the 
resilience of the global financial system, while preserving its open and integrated structure. The 
FSB was established by the G20 in 2009 to coordinate the development and to monitor the 
implementation of this program.  The reform program launched in 2009 focused on four core areas: 
making financial institutions more res ilient; ending too -big-to-fail; making derivatives markets 
                                                
1 This document has be en prepared under the Secretariat's own responsibility and is without prejudice 
to the positions of Members or to their rights and obligations under the WTO.  S/FIN/M/ 92 
 
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  safer; and t ransforming shadow banking into resilient market -based finance . These core areas of 
work had been complemented  by reforms in other areas , including macro -prudential regulation, 
accounting and auditing, credit rating age ncies, regulation and supervision of hedge funds, and 
filling in data gaps. By making the financial system more resilient and thereby reducing the 
likelihood and severity of future crises, the reforms aimed at reducing the public costs and losses 
in output  and employment  associated with such crises.  
2.5.  Mr Stephanou addressed each of the four core reform areas. The Basel risk -based capital and 
liquidity framework (Basel III)  was the centerpiece  of the international community 's work to build 
more resilient finan cial institutions. The Basel Committee on Banking Supervision (BCBS) ha d 
largely completed the design of the reforms and continue d to monitor implementation. It had also 
issued stronger guidance on various issues, including the functioning of supervisory c olleges. The 
FSB had adopted the Principles and Standards for Sound Compensation Practices, aiming at 
reducing incentives for excessive risk taking that m ight arise from the structure of firms ' 
compensation schemes.  
2.6.  Work was under way at the BCBS on the re maining elements of the Basel III framework , on 
the regulatory capital treatment of sovereign exposures , and on ways to increase the quality and 
timeliness of information shared among members of supervisory colleges.  Work was also under 
way at the IAIS to develop a global insurance capital standard.  
2.7.  Turning to second major area of reform, Mr Stephanou explained that s ystemically important 
financial institutions (SIFIs) were financial institutions whose distress or disorderly failure, because 
of their size, complexity and systemic interconnectedness, would cause significant disruption to the 
entire financial system . The objective of the SIFI framework was to address the systemic risks and 
the associated moral hazard problem for institutions that were seen by markets as too -big-to-fail 
(TBTF). The framework was an integrated set of  policy measures consisting of  the 
following:  1) requirements for higher loss absorption capacity to r eflect the greater risks that 
G-SIFIs pose d to the global financial system ; 2) m ore intensive and effective supervision , including 
through stronger supervisory mandates, resources and powers; rigorous coordinated assessment 
of the risks facing the G -SIFIs through international supervisory colleges; and greater focus on 
SIFI's risk mana gement and governance; and 3) an international standard setting out the 
responsibilities, instruments and powers that all national resolution regimes should have to enable 
authorities to resolve failing financial firms in an orderly manner  (the FSB Key Att ributes of 
Effective Resolution Regimes).  
2.8.  The third core area of reform focused on the creation of robust derivatives markets. In order 
to achieve this, the G20 had agreed that all OTC derivatives contracts should be reported to trade 
repositories (TRs);  all standardized  contracts should be cleared through central counterparties 
(CCPs);  all standardized  contracts should be traded on exchanges or electronic trading platforms, 
where appropriate;  and non-centrally cleared (bilateral) contracts should be subjec t to higher 
capital requirements and  minimum margining requirements.  Implementing these reforms has 
required significant changes to FSB member jurisdictions ' regulatory regimes.  
2.9.  The fourth core area of reform focused on transforming shadow banking into re silient 
market -based finance. The FSB 's work on shadow banking follow ed a two -pronged strategy:  
establishing a system -wide monitoring framework through the FSB 's annual monitoring exercise ; 
and developing policy measures to strengthen the oversight and reg ulation of shadow banking to 
mitigate potential bank -like systemic risks, with specific focus on five areas  (i) mitigating the spill -
over effect between the regular banking system and the shadow banking system;  (ii) reducing the 
susceptibility of money mar ket funds (MMFs) to "runs"; (iii) improving transparency and aligning 
incentives associated with securitisation;  (iv) dampening pro -cyclicality and other financial stability 
risks associated with securit ies financing transactions; and  (v) assessing and mit igating systemic 
risks posed by other shadow entities and activities .  
2.10.   After reviewing the four core reform areas, Mr Stephanou said that p olicy reforms to be 
completed included the following:  finalise the remaining elements of the Basel III framework ; 
develop a global insurance capital standard ; finalise the remaining elements of the Total Loss -
Absorbing Capacity (TLAC) standard ; finalise work on central counterparty (CCP) resilience, 
recovery and resolvability ; develop data standards for the reporting of over-the-counter (OTC) 
derivatives transactions ; and o perationalise the FSB recommendations for addressing asset 
management risks . S/FIN/M/ 92 
 
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  2.11.   FSB priorities for 2017  were the following: 1) supporting  full and consistent implementation 
of post -crisis reforms ; 2) transforming  shadow banking into resilient market -based 
finance ; 3) making  derivatives markets safer ; and 4) addressing  new and emerging vulnerabilities . 
He added that the FSB would present a  progress report in these areas at the G20 Hamburg 
summit in July 2017 .  
2.12.   Progress in the implementation of reforms had been uneven across the four core areas. The 
effects of the reforms to date had been generally positive: the l argest internationally active banks 
were considerably more resilient ; good progress had been made in strengthening the resilience of 
financial markets ; the s ources of finance were increasingly diversified ; and the c redit had been 
growing in all major economies, while the cost of financing ha d remained low  (exceptionally 
accommodative monetary policies had contributed to this outcome ). However, authorities need ed 
to remain vigilant in a number of areas, namely market liquidity ; the e ffects of reforms on 
emerging market and developing economies (EMDEs); and the need to maintain an open and 
integrated glob al financial system.  
2.13.   Turning to cross -border issues , Mr Stephanou said that further cross-border cooperation 
was needed for the effective implementation of reforms , for example, with regard to resolution 
regimes and OTC derivatives markets. The FSB and other standard -setting bodies were working to 
promote deeper cross -border co-operation, by s trengthening or developing new international 
standards , adopting robust implementation monitoring/reporting , and promoting approaches to 
cross-border cooperation . He a dded that t he G20 reforms appear ed to have helped avoid 
significant retrenchment and market fragmentation, which were common features of past financial 
crises . 
2.14.   Turning to the effects of the reforms on EMDEs, the FSB representative said that n o major 
uninte nded consequences had been r eported to date by EMDEs – the evidence being 
predominantly qualitative  – but remained about global banks reducing their presence and activities 
in some markets as a result of a reassessment of business models . In that regard, h e considered 
that cr oss-border spillovers m ight be reflecting differences in how home jurisdictions of these 
banks implement ed reforms or adopt ed additional national policies ( the so -called " gold-plating "). 
He further clarified that much of the reduction i n cross -border bank lending ha d been from 
European banks to advanced economies . The FSB would further examine drivers and implications 
of this trend, and follow up on implementation issues . 
2.15.   The FSB framework to evaluate the effects of reforms  was p ublished for consultation in 
April 2017. The framework was expected to be issued before the July 2017 G20 Summit . It had 
been developed by the FSB in close collaboration with standard -setting bodies and other 
stakeholders  and aimed to guide analyses of whether the  G20 reforms were achieving their 
intended outcomes, and help identify any material unintended consequences that may have to be 
addressed, without compromising on the objectives of the reforms.  The framework would provide 
guidance on processes and analytic al approaches for the evaluation of reforms , and would serve to 
inform structured policy discussions among FSB members and standard -setting bodies . 
2.16.   The FSB was also addressing emerging vulnerabilities, by focusing on four areas: 
misconduct risk, correspond ent banking and remittances, climate -related financial disclosures, and 
financial technology ( FinTech) and cyber resilience. S ignificant misconduct issues ha d arisen in 
recent years . The FSB launched a coordinated action plan in 2015 comprising  the followi ng 
elements: reforms to financial benchmarks to reduce opportunities for market manipulation ; 
examination of whether reforms to incentives were sufficiently reducing misconduct and whether 
additional measures were needed ; and assessment of whether steps were needed to improve 
global standards of conduct in the fixed income, commodities and foreign exchange (FX) markets 
in order to increase individual accountability and support enforcement actions . The FSB would 
report on actions taken and recommendations ma de to address misconduct risk by the G20 
Hamburg Summit . 
2.17.   International banks’ withdrawal of correspondent banking services in some countries could 
create financial exclusion and c ould drive some payment flows underground . The FSB, in 
partnership with other  organisations, was implementing a 4 -point action plan to assess and 
address the decline in correspondent banking . The plan consisted of d ata collection and analysis to 
further examine the dimensions of the problem ; clarifying regulatory expectations ; building 
domestic capacity through technical assistance to meet anti -money laundering (AML) and S/FIN/M/ 92 
 
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  combating the financing of terrorism (CFT) standards ; and d eveloping stronger tools for due 
diligence by correspondent banks . 
2.18.   He also explained that a ccess to bette r quality information on climate -related financial risks 
was essential to enable market participants to better understand and manage these risks . To that 
end, the F SB established an industry -led Task Force on Climate -related Financial Disclosures  
(TCFD) in  December 2015 . In December 2016, the TCFD published a consultation paper for 
disclosure of climate -related financial risks . The paper included recommendations for voluntary, 
consistent climate -related financial disclosures and leading practices in four ke y areas: i) 
governance , ii) strategy, iii) risk management, and iv) metrics and targets . The final TCFD Report 
was expected to be published in advance of the July 2017 G20 Hamburg Summit . 
2.19.   Mr Stephanou explained that f inancial technology (FinTech) innovatio ns ha de the potential 
to transform elements of the financial system . Financial authorities must ensure they were 
prepared to respond to financial stability risks that m ight emerge, without stifling innovation . The 
FSB and other standard -setting bodies were  actively monitoring financial technologies, e.g. 
FinTech credit, innovation facilitators, distributed ledger technology cases, artificial intelligence , 
and machine learning . In May 2017, the FSB and the BIS Committee on the Global Financial 
System publish ed a case study on Fin Tech Credit . The FSB ha d also developed a framework to 
assess financial stability implications and was drawing out the supervisory and regulatory issues 
meriting authorities ' attention , and would report to the G20 in June 2017. With r egard to c yber 
resilience , the FSB was undertaking a stock -take of regulatory guidance and supervisory practices 
related to cybersecurity , and would report to the G20 by October 2017 . 
2.20.   In concluding his presentation, the FSB representative said that the benefits of the G20 
reforms were beginning to be realised . Failure to complete or fully implement the necessary 
policies and standards could leave vulnerabilities, and lead to fragmentation of regulation and 
markets . International cooperation should be enhanc ed. As implementation advance d, reforms 
should be monitored and adjusted dynamically in order to achieve efficient resilience and avoid 
unintended consequences . Alongside the above, the FSB w ould continue to scan for and address 
emerging risks and vulnerab ilities. 
2.21.   The FSB presentation was followed by a presentation by the Secretary -General of the 
International Association of Insurance Supervisors (IAIS), Mr Yoshihiro Kawai.  
2.22.   In his presentation, the representative of the International Association of Insuran ce 
Supervisors  (IAIS) addressed the Insurance Core Principles (ICPs) ; the Common Framework for 
the Supervision of Internationally Active Insurance Groups (IAIGs) , generally known as 
ComFrame ; the development of the global risk -based Insurance Capital Stand ard (ICS) ; Global 
Systemically Important Insurers framework ( G-SII framework ); and other key standards.  
2.23.   The IAIS adopted a three -tiered approach to standard -setting . Four different types of 
entities were affected: individual entities, insurance groups, In ternationally Active Insurance 
Groups (IAIGs) , and Global Systemically Important Insurers (G -SIIs), which were designated 
annually by the Financial Stability Board (FSB), based on  recommendations from the IAIS. The 
first tier was the Insurance Core Princip les (ICPs) which appl ied to all of the entities. The second 
tier consisted of  the set of ComFrame requirements which appl ied only to IAIGs and G -SIIs. The 
third tier was the package of policy measures for G -SIIs, which only applied to G -SIIs. Overall, the 
IAIS ha d developed an architecture of principles, standards and guidance that was tailored to the 
different segments of the insurance sector. This approach aimed at balancing regulatory  goals with 
market efficiency.  
2.24.   The Insurance Core Principles (ICPs) li ed at the heart of the IAIS 's standard setting 
activities. The ICPs consisted of 26 principles, which had been grouped into related themes, for the 
sake of the presentation. Some of these we re common to all financial supervisors while others 
were more spec ific to the insurance sector.  The first group of ICPs ( Internal – Supervisor) relate d 
to the Supervisor itself and to the need for Supervisors to be independent  and adequately 
resourced and to have adequate powers to supervise.  The second group of ICPs ( Actions)  relate d 
to licensing, on -going actions and winding -up arrangements. The third group of ICPs ( Insurer 's 
governance) relate d to governance and risk management. The fourth group of ICPs ( Insurer 's 
prudential  behaviour ) relate d to prudential arrangement s, including reinsurance, valuation, S/FIN/M/ 92 
 
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  enterprise risk management, solvency and capital adequacy. The fifth group of ICPs ( Insurer 's 
market conduct) relate d to market conduct arrangements. The sixth group related to 
macroprudential surveillance. The seventh group of ICPs ( External) relate d to fraud, Anti-Money 
Laundering and Combating the Financing of Terrorism. The eighth group of ICPs ( Other 
Supervisors) cover ed Supervisory Cooperation and Coordination , and related issues.  
2.25.   The ComFrame's objectives were to  establish a comprehensive framework for group -wide 
supervision , and to foster global convergence of regulatory and supervisory requirements . It 
applied to IAIGs and G-SIIs. 
2.26.   As already mentioned, the IAIS was developing a global risk -based Insurance Capita l 
Standard (ICS) to be applied by all IAIGs. The ICS ratio was determined by comparing the amount 
of "qualifying capital resources " to the "ICS capital requirement ". Prior to the development of the 
ICS, t he IAIS ha d developed and adopted the first two capi tal standards  – the basic capital 
requirements ( BCR) in 2014 , and the higher loss absorbency (HLA) requirement for G-SIIs in 
2015. He added that the IAIS would continue to work on th e key elements of the ICS, due to be 
adopted by 2019.  
2.27.   Mr Kawai considered  that the  ICS was the most important project that the IAIS ha d ever 
undertaken. It was expected to have a significant impact on insurance business and regulation in  
the coming years. The ultimate goal of the ICS was to achieve substantially the same capita l 
requirements across jurisdictions. The ICS was intended to achieve a global level playing field , 
assist regulators, and improve IA IG's efficiency in their global operations. The goal was to develop 
a prescribed capital requirement  (PCR) as defined in the  IAIS Insurance Core Principles (ICPs). The 
ICS was a central par t of ComFrame . The IAIS expected gradual implementation of the ICS by 
jurisdictions from 2020. Legislators and rule makers were expected to begin incorporation of the 
ICS into their rules fro m 2020. He added that in all likelihood the IAIS would  start to conduct peer 
reviews and self -assessment of implementation soon afterwards.  
2.28.   Based on lessons learnt from the financial crisis, in 2013 the IAIS devel oped the G -SII 
policy framework , covering G-SII assessment methodology and G -SII policy measures. In 
collaboration with the FSB, 9  insurance companies ha d been designated as G-SIIs. The list was 
reviewed every year. The G-SII policy measures include d enhanced supervision, a systemic risk 
management  plan, a liquidity risk management plan, crisis management groups, recovery and 
resolution plans , and higher capital requirements from 2022.  
2.29.   In concluding his presentation, Mr Kawai focused on two areas which had attracted 
significant attention over the p ast few years: (i) financial inclusion; and (ii) FinTech and cyber 
security. Financial inclusion was an important mandate for the IAIS. In fulfilling this mandate, the 
IAIS had increasingly focused on providing supervisors with the guidance and tools to de velop the 
knowledge, skills and expertise needed to implement international standards in such a way as to 
create the circumstances for increasing insurance penetration and maintaining high policy holder 
protection. The IAIS had indeed been very active in t his area, developing guidance papers on the 
proportionate application of our principles and standards, producing case studies on how to 
practically apply these lessons, and supporting its member supervisors to implement a 
proportionate approach on the grou nd. One of the main objectives of the IAIS in this area was also 
to raise awareness amongst policy makers on the role of insurance in supporting economic 
development and supporting broader policy objectives such as poverty reduction and disaster 
resilience . The IAIS has carried out this mandate in partnership with various stakeholders, most 
importantly with the Access to Insurance Initiative (A2ii).  Lastly, the IAIS had also turned its 
attention to FinTech and cyber security issues, producing two relevant r eports: the "Issues paper 
on cyber risk to the insurance sector" (2016), and the report on "FinTech developments in the 
insurance industry" (2017).  
2.30.   The representative of Japan  thanked both presenters for the very informative and thorough 
presentations. She  stressed the importance of dialogue between the WTO and the international 
standard -setting bodies, and the share of experiences and information in areas of common 
interest. She asked both of them whether there had been any work or initiative in their resp ective 
agencies focusing on financial inclusion for Small and Medium -sized Enterprises (SMEs).  S/FIN/M/ 92 
 
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  2.31.   The representative of the United States  also thanked both presenters for their 
presentations.  He asked the FSB representative to explain whether the effects of reforms on 
EMDEs referred to either the effects of reforms carried out by EMDEs themselves, or whether they 
referred to the effects on EMDEs of reforms undertaken by developed countries - or to both types 
of effects. He also asked the FSB representative wh ether he could elaborate further on the 
concerns about global banks reducing their presence and activities in some markets . 
2.32.   Replying to the question raised by Japan, th e representative of the IAIS said that the IAIS 
had done extensive work on issues relate d to financial inclusion over the last decade. This focus 
was in line with IAIS mission and responded to the needs of its broad membership of over 200 
insurance supervisors, two thirds of which from emerging markets, and many of whom had 
identified inclusi on as a policy objective.  The work of the IAIS focused on financial inclusion in the 
sector but did not address specifically the situation of SMEs.  
2.33.   Replying to the same question, the representative of the FSB said, by its nature, the FSB 
did not have a sp ecific mandate or objective on financial inclusion. Therefore, there were no 
specific initiatives on that matter. Rather, the FSB focused on whether and how regulatory reforms 
had affected financing, both in overall terms and to SMEs.  
2.34.   Replyin g to the ques tions raised by the United States, he said that  in some cases  the effects 
of reforms on EMDEs stemmed from their own implementation of  such reforms, in combination 
with specific domestic factors . In other cases, however, they stemmed from cross -border spil lover 
effects arising from the implementation of reforms by home jurisdictions of global banks operating 
in EMDEs. These factors, combined with broader macroeconomic developments and the 
reassessment of global banks' business models, might have contributed  to the reduced presence 
and activities of global banks in some EMDEs. But no major adverse effects had been recorded. 
International bank lending had declined since the crisis and its structure had shifted from cross -
border towards more stable regionally -funded lending. This reduction was particularly marked for 
cross-border lending by European banks to advanced economies and emerging Europe. However, 
cross-border lending between other regions had continued to expand and, where European banks 
pulled back, t hey were replaced by lending from other – regional – banks. Asia was a case in 
point.  
2.35.   The representative of Canada  thanked both speakers for their informative and interesting 
presentations. Canada continued to value th e engagement with international stand ard-setting 
bodies. He also appreciated the emphasis put by presenters on cross -border issues. Noting that 
global financial integration had slowed down since the global financial crisis, he asked the FSB 
representative whether he could elaborate on the iss ue and whether  he could point at specific 
indicators of that trend.  
2.36.   The representative of the Dominican Republic  also thanked both speakers for their 
presentations. He asked the FSB representative whether the FSB had analysed the impact of de -
risking on developing countries, and in particular the effect on remittances. He further considered 
that de -risking might also affect other payments for health or education services abroad.  
2.37.   The representative of Switzerland  also thanked both speakers for their presen tations. He 
asked the FSB representative whether the FSB had assessed the impact of different regulations on 
cross-border OTC derivative transactions.  
2.38.   Replying to the question by Canada, th e representative of the Financial Stability Board  said 
that the  evidence to date suggest ed that the financial crisis ha d slowed down, but not reversed, 
the long -term trend toward higher global financial integration.  This overall trend had been driven 
mainly by an increase in equity and foreign direct investment, while deb t-financing had gone back 
to pre -crisis levels of 2004/5.  Turning to the question by the Dominican Republic, he said that the 
FSB's focus was on correspondent banking. The FSB was coordinating an action plan, in 
partnership with other organizations , to ass ess and address international banks ' withdrawal of 
correspondent banking services, which was an issue of concern for many EMDEs but also for other 
countries . The action plan consisted of four elements: data collection and analysis, clarifying 
regulatory ex pectations, domestic capacity building, and strengthening tools for due diligence by 
correspondent banks.  S/FIN/M/ 92 
 
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  2.39.   In response to Switzerland, the FSB representative said that the FSB's review of OTC 
derivatives market reforms was due to be published by the end of  June. He agreed that different 
jurisdictions could implement the reforms in different ways, in a manner consistent with the 
international standards but not consistent with each other. The long -term economic effects of the 
reforms were difficult to assess . The FSB had not evaluated the ultimate costs and benefits of 
these reforms. Others had done that. While the costs of regulations might be observable, 
measuring the social benefits of reforms remained challenging.  
2.40.   Wrapping up discussion, t he Chairperson  thanked Mr Kawai and Mr Stephanou and, through 
them, the IAIS and the FSB Secretariats, for participating in this meeting of the Committee. He 
considered that Members had learnt a lot about the latest developments and the current work 
program in these two international standard -setting agencies, and how those activities interact ed 
with issues of interest to this Committee. In his view, this information would certainly prove useful 
for the Committee.  
2.41.   The representative of the United States  said that it would be useful to revisit the aim and 
purpose of this exercise , and discuss Members' expectations and contributions. He felt that many 
of the topics introduced exceeded the capacity of Members of this Committee. He suggested that 
these issues should be further discussed before proceeding with invitations to other international 
standard -setting bodies.  
2.42.   The Chairperson  said that the issues raised by the United States could be better addressed 
in agenda item E.  
2.43.   The Committee took note  of the statements made and decided to revert to this agenda item 
at the next meeting.  
3  ITEM C - TRADE IN FINANCIAL S ERVICES AND DEVELOPM ENT  
3.1.  The Chairperson  recalled that  at the previous meeting, discussion focused on payment 
services. China suggested a discussion on payment services d irectly supporting cross -border trade 
in goods enabled by the Internet. In addition, Costa Rica (on behalf of the Friends of E -commerce 
for Development) summarized the proceedings and salient issues of the seminar on ePayments 
and Financial Inclusion organ ized by this group of Members on 13 March 2017, and to which all 
Members had been invited. Following up on its statement at the last meeting, China ha d requested 
the addition of the following sub -item under this agenda item: Payment Services Directly 
Suppo rting Cross -border Trade in Goods Enabled by the Internet.  
3.2.  The representative of China  said that on 4 November 2016, China formally submitted its e-
commerce communication to the General Council (GC), the Council for Trade in Services (CTS), 
the Council for  Trade in Goods (CTG) and the Committee on Trade and Development (CTD), 
proposing to focus discussions on how to further facilitate cross -border trade in goods enabled by 
the Internet, together with services directly supporting such trade in goods, for exa mple payment 
and logistics services. Payment service s constitute an indispensable link in the E -commerce 
ecosystem of cross -border trade in goods through the Internet. No transaction c ould be completed 
without payment service s. Reference was usually made to such online payment service that 
supports the successful completion of e -commerce activities as electronic payment service s or e-
payment service s. The rapid development of e -payment service s had greatly improved the 
efficiency of payment s, reduced the co st of social transactions, promoted the development of 
consumption and e -commerce, and stimulated economic growth.  
3.3.  At the meeting of the Committee held in March, China encouraged members to share 
information on the development and regulation of payment ser vices related to e -commerce. In an 
era where traditional finance and Internet -based finance intertwined , in-depth discussion on e -
payment service s would help Members  understand and compare notes on recent trends and 
developments . On this occasion, China's intention was to share information on th e state of play of 
e-payments, and related regulatory practices, in China. She encouraged Members to participate in 
the discussion and provide their own views.  
3.4.  In recent years, China ha d been one of the regions witn essing the most dynamic progress of 
e-payment business.   S/FIN/M/ 92 
 
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  3.5.  With the rapid development of non -cash payment instruments and the swift transformation 
from traditional paper  bills and card -based payment to e -payment, new electronic payments 
modalities, such as i nternet payment s and mobile payment s, have emerged. Providers of payment 
services ranged from traditional banking financial institutions to non -banking payment institutions. 
In 2016, China 's banking financial institutions handled a total of 140 billion e -payment dealings, 
with a cumulative amount of RMB2,494 trillion , while non -banking  payment institutions 
completed  164 billion network payment dealings, realizing an amount of over RMB99 billion, with 
the year -on-year growth rate hitting 99.5% and 100.7% , respectively.  
3.6.  The main trends in China's e -payments development had been the following. First, e -
payment s by non -banking payment institutions had been growing rapidly.  Since the People 's Bank 
of China promulgated the  Administrative Measures for the Payment S ervices Provided by Non -
financial Institutions  in 2010, the so -called third -party payment business ha d embarked on a fast 
development track, characterized by the swift growth of non -banking payments institutions, 
constant e -payment innovation, improved cus tomer experience, and an enlarged business scale. 
These trends had tremendously facilitated the daily retail payment activities of the general public, 
and turned out to be one of the highlights in the development of China 's payment industry. 
From 2013 to 2 016, the total transaction batches of non -banking payment institutions increased 
from 37 billion to 185 billion and the amount handled rose from RMB17.6 trillion to RMB119.6 
trillion, with an annual compound growth rate of 70.9% and 89.5% , respectively.  
3.7.  Second, the inclusiveness of e -payment s had been significantly enhanced. The rapid 
development of electronic payment s in China ha d benefited from the popularization of account s. As 
of end-2016, China recorded 6 personal bank settlement accounts per capita (3 .9 in rural areas) , 
making possible the access of a vast number of customers to financial services. In addition, the 
expansion of  bank outlets, ATMs, POS and other bank card processing equipment, as well as the 
widespread availability of  mobile phones, PCs  and other network login terminals , had provided the 
necessary technical foundation for the widespread use of e -payment services by the public. 
Supported by these favorable conditions, e -payment s had been widely accepted and favored by 
the public, includin g the most vulnerable groups of society.  
3.8.  Third,  the "application scenarios " of e-payment services had greatly diversified. Along with 
the rapid development of e -commerce and mobile internet in China, online services had expanded 
in an accelerated manner a nd come to cover almost all aspects of daily life. The " application 
scenarios " of e-payment service s had been constantly enriched, thanks also to the availability of 
numerous online and offline application scenarios. The demand for fragmented payment servi ces 
can be satisfied anytime anywhere . As a result, e-payment service s had become more c losely 
integrated with people 's daily life. 
3.9.  As new payment institutions and e -payment service s emerged, a balance should be ensured 
between, on the one hand, the active  support to innovation, so as to bring into full play the 
advantages of e-payments and promote e -commerce development, and on the other hand, the 
safeguard of participants' rights and interests against payment risks.  
3.10.   The Chinese government ha d worked hard  to establish and perfect the institutional 
arrangement s for e -payment s. The People 's Bank of China promulgated, among others, the  
Electronic Payment Guidelines (No.1) , Administrative Measures for the Payment Services Provided 
by Non -Financial Institutions , Administrative Measures for the Online Payment Services of Non -
Banking Payment Institutions . This ha d consolidated the institutional basis for e -payment s, and 
provided the necessary institutional guarantee s for the regulation of the e-payment service s 
market and the promotion of e -commerce. She noted that the draft Electronic Commerce Law of 
China, which was currently being deliberated by the National People ' Congress contained a 
dedicated section on Electronic Payment  in its Chapter Three  (Transaction an d Services in E -
commerce ). This section  of the draft law  provided rules for  business in the area of non-banking 
payment s, including the concept of e -payment, supervision and regulation, real -name account 
system, obligations of e -payment service providers, payment orders and management of excess 
reserves. Chapter Seven of the draft law on Legal Liability  provide d for the punishment of non -
compliant conduct of e -payment service providers. These systematic arrangements had ensured 
the sound development of e -payment service s, and further facilitated cross -border trade in goods 
enabled by the internet.  S/FIN/M/ 92 
 
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  3.11.   Moreover, in order to facilitate e -commerce transactions of Chinese domestic institutions 
and individuals through the internet,  the State Administration of Foreign  Exchange promulgated 
the Guiding Opinions on the Pilot of Cross -border Foreign Exchange Payment Business provided by 
Payment Institutions , encouraging payment institutions to provide both parties of the e -commerce 
transactions with services of centralized  receipts and payments of foreign exchange funds, as well 
as relevant foreign exchange settlement . 
3.12.   In concluding her statement, she hoped that China's experience would enhance Members' 
understanding of these financial services, and how they might contribut e to developing countries' 
economic development and integration into the global trading system. She encouraged Members 
to engage in these discussions and share their own experiences.  
3.13.   No other Member took the floor under this agenda item.  
3.14.   The Chairperson  thanked China for the statement, and encouraged Members to pursue 
discussions on this topic, which was closely linked to development.  
3.15.   The Committee took note  of the statement s and decided  to revert to this agenda item at the 
next meeting.  
4  ITEM D – RECENT D EVELOPMENTS IN FINAN CIAL SERVICES TRADE  
4.1.  The Chairperson  recalled that Jamaica (on behalf of CARICOM) had submitted a draft 
proposal for a seminar on de -risking and correspondent banking (JOB/SERV/244). It was his 
understanding that consultations among int erested parties had been held since the last meeting, 
and that Jamaica had the intention to provide the Committee with an update on deve lopments 
regarding the proposal . He offered the floor to Jamaica.  
4.2.  The representative of Jamaica  recalled that Members ha d been unable to reach consensus on 
the holding of this seminar. The matter ha d been subse quently subject to informal consultations 
between the proponents and a number of delegations , as well as within the CARICOM group. These 
consultations were still on -going. She added that CARICOM would inform the Committee of any 
outcome and of any related developments on the way forward.  
4.3.  No other Member took the floor under this agenda item.  
4.4.  The Committee took note  of the statement and decided  to revert to this agenda  item at the 
next meeting.  
5  ITEM E – FUTURE WORK AND TIMI NG OF THE NEXT MEETI NG  
5.1.  The Chairperson  asked whether any delegation wanted to provide views under this agenda 
item. 
5.2.  The representative of the United States  reiterated the suggestion he made under ite m B of 
the agenda. He felt that more clarity was needed as to the object and purpose of the participation 
of international standard -setting bodies. His delegation was not sure whether the original focus 
should be retained. He suggested that Members should further discuss this before extending 
further invitations to international standard -setting bodies.  
5.3.  No other Member took the floor under this agenda item.  
5.4.  The Chairperson  said that, in light of the suggestion made by the United States, he would 
undertake informal consultations on future work and the timing of the next meeting, and would 
decide accordingly.  
5.5.  The Committee took note  of the statements . S/FIN/M/ 92 
 
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  6  ITEM F - OTHER  BUSINESS  
6.1.  There  were no issues raised under Other Business . 
 
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