RESTRICTED  
  
S/FIN/M/ 91 
 
18 May 2017 
(17-2654) Page: 1/6 
Committee on Trade in Financial Services    
 
REPORT OF THE MEETIN G HELD ON 15 MARCH 2017  
NOTE BY THE SECRETAR IAT1 
The Committee on Trade in Financial Services held a meeting on 15 March 2017 , under the 
chairmanship of Ms Junko Ueno (Japan) . The agenda was contained in Airgram  WTO/AIR/CTFS/ 8. 
An annot ated agenda by the Chairperson was issued p rior to the meeting (JOB/SERV/253 ). The 
Chairperson noted that agenda item F – Appointment of the Chairperson of the Committee – would 
normally be taken up at the end of the meeting. However, consultations in the General Council on 
the appointments of Chairpersons to WTO Councils and Committees had not yet been concluded. 
Consequently, the Chair of the Council for Trade in Services had been unable to conduct 
consultations on the appointment of the Chairs for the se rvices subsidiary bodies. The Chairperson 
therefore suggested that the Committee should not address agenda item F. With that modification, 
the agenda was adopted.  
1  ITEM A - REGULATORY ISSUES IN  FINANCIAL SERVICES   
1.1.  The Chairperson  recalled that in the contex t of the Committee's review of recent 
developments in global financial regulatory reform and their implications for trade in financial 
services, and following an invitation extended by the Committee, the Secretariat of the Committee 
on Payments and Market Infrastructures (CPMI) ha d kindly agreed to make a presentation at the 
present meeting. She also recalled that the CPMI Secretariat had participated at the Seminar on 
Mobile Banking organized by the Committee in November 2014. Some basic background 
informa tion on the CPMI was  included in the Annotated Agenda for th e meeting. The presentation 
at this meeting was delivered by Mr Yuuki Shimizu, member of the CPMI Secretariat .  
1.2.  The CPMI representative explained that the origins of the CPMI dated back to 1980, w hen the 
Governors of the central banks of the Group of Ten (G10) countries set up a Group of Experts on 
Payment Systems . In 1990 , the G10 Governors established the Committee on Payment and 
Settlement Systems (CPSS), which took over and furthered the activi ties of the Group of Experts. 
The CPSS was set up as one of the permanent central bank committees reporting to the G10 
Governors.  First in 1997 -1998 and then in 2009, the membership of CPSS was enlarged to include 
25 central banks. In September 2013, the C PS's mandate was reviewed. Together with the 
approval of the new mandate, the CPSS was renamed Committee on Payments and Market 
Infrastructures  (CPMI). Both changes became effective as of 1 September 2014.  
1.3.  The CPMI's mandate was to promote the safety and e fficiency of payment, clearing, 
settlement and related arrangements, thereby supporting financial stability and the wider 
economy , and to monitor and analyse developments in these arrangements, both within and 
across jurisdictions. Comprising senior offici als from 25 central banks, the CPMI was the global 
standard setting body in the field of payments, clearing and settlement systems and related 
activities. Standards issued thus far included the Principles for financial market infrastructures  or 
PFMI (April  2012), the Recovery of financial market infrastructures (October 2014), the Guidance 
on cyber resilience for financial market infrastructures (June 2016) and the report on 
correspondent banking (July 2016). The PFMI, jointly developed by the CPMI and IOSC O, was part 
of the 12 key standards for sound financial systems identified by the Financial Stability Board 
(FSB).  
                                                
1 This document has been 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/ 91 
 
- 2 - 
 
  1.4.  The CPMI also served as a forum for central bank cooperation in related oversight, policy and 
operational matters. In that capacity, the Com mittee issued reports on issues of interest such as 
digital currencies (November 2015), payment aspects of financial inclusion (April 2016), and  fast 
payments (November 2016).  
1.5.  Turning to the CPMI current work program, Mr Shimizu said that recent standard -setting 
activity had focused on recovery of central counterparties (CCPs), cyber resilience of financial 
market infrastructures, and harmonization of over -the-counter (OTC) derivatives data. Another 
strand of work was focused on m onitoring  the implementatio n of the PFMI, a high priority for the 
CPMI,  which involved three phases: Level 1, on the adoption of  the PFMI in domestic regulator y 
frameworks; Level 2, on the completeness and consistency of these regulatory  frameworks; and 
Level 3, on the consistency i n the outcomes of the PFMI  implementation across jurisdictions.  A 
second component of the CPMI work program consisted of analytical and monitoring activities, 
which were conducted through several working groups (on central clearing interdependencies, on 
financial inclusion, on correspondent banking, on cross -border retail payments, and on digital 
innovations).   
1.6.  The remainder of the presentation focused on the CPMI's work related to cross -border 
payments, and addressed , in particular , payment aspects of fin ancial inclusion, de -risking in 
correspondent banking activities, and recent developments in cross -border payments.  
1.7.  The CPMI and the World Bank had set up a joint task force in mid -2014 to  examine payment 
aspects of financial inclusion (PAFI). In April 20 16, both organizations had issued the PAFI Report 
containing seve n guiding principles to help countries increase financial inclusion and to tackle 
barriers to the adoption and usage of transaction accounts, which sat at the heart of retail 
payment services . A transaction account was an account held with banks or other authorized 
and/or regulated non -bank service provider, which could be used to make and receive payments 
and to store value, and which could serve as a gateway  to other financial services such as savings, 
credit and insurance. However, Mr Shimizu said that nearly 40% of the world's adult population - 
about 2 billion people - still ha d no account with a bank or authorized non -bank service provider.  
In low -income countries that percentage was sign ificantly higher. Financial inclusion efforts were 
beneficial not only for those who w ould become financially included, but also for the national 
payments infrastructure and, ultimately, the economy.  
1.8.  The seven guiding principles were the following: 1 ) comm itment from public and private 
sector organizations ; 2) a robust legal and regulatory framework underpinning financial inclusion; 
3) safe, efficient and widely reachable financial and ICT infrastructures; 4) transaction accounts 
and payment product offerin gs that effectively meet a broad range of transaction needs; 5) 
availability of a broad network of access points and interoperable access channels; 6) effective 
awareness and financial literacy efforts; and 7) the leveraging of large -volume and recurrent 
payment streams, including remittances, to advance financial inclusion objectives.  In addition to 
outlining principles to help countries advance financial inclusion, the report suggest ed possible key 
actions, including providing basic accounts at little or no cost, stepping up efforts to increase 
financial literacy, and leveraging large -volume payment programs, such as government payments, 
by adopting electronic payment services. Finally, the fifth chapter of the report addresse d a 
number of issues in connec tion with measuring  the effectiveness of financial inclusion efforts in the 
context of payments and payment services, with a  particular emphasis on transaction account 
adoption and usage.   
1.9.  The CPMI 's work on correspondent banking stemmed from concerns by c entral bank 
governors of the BIS Economic Consultative Committee (ECC) that, while banks had traditionally 
maintained broad networks of correspondent banking relationships  (CBRs) , there were growing 
indications that this situation might be changing. In par ticular, some banks providing these 
services were reducing the number of relationships they maintain ed and were establishing few new 
ones, and small banks might be having trouble in gaining access to CBRs . If left unchecked, these 
developments might result  in some countries or categories of customers becoming excluded from 
the global financial system.  
1.10.   The issue was very complex, and could be approached from different angles, e.g. AML/CFT 
compliance, de -risking, financial inclusion, or payment systems. Being a body of payment experts, 
the CPMI received a mandate from the central bank governors to produce a report to  (i) analyse  
main trends; and  (ii) develop technical measures  that could help address the issue from the S/FIN/M/ 91 
 
- 3 - 
 
  payment system aspects of correspondent banking  (taking the current AMF/CFT regulatory 
framework as given, as these issues were within the responsibility of other bodies such as the 
FATF and BCBS ). The analysis  using SWIFT data show ed a falling number of active correspondents 
and a rise in volum e in recent years, suggesting a concentration of  correspondent banking 
activities  in a small number of banks.  
1.11.   The report made five recommendations, namely 1) wider and more appropriate use of 
know -your-customer (KYC) utilities; 2) wider use of the Legal En tity Identifier (LEI) in 
correspondent banking; 3) more effective information -sharing; 4) improvements in payment 
messages; and 5) use of the LEI as additional information in payment messages.  In the CPMI's 
view, these recommendations might alleviate some of the costs and concerns connected with 
correspondent banking activities ; in isolation, however, these measures would not resolve all the 
issues. The CPMI acknowledge d that the issues surrounding the withdrawal from correspondent 
banking were very complex  and that costs related to AML/CFT compliance were only one of the 
elements that ha d to be considered in order to understand recent trends. Moving forward, it was 
important to support implementation of these recommendations. In that regard, Mr Shimizu 
highlighted the work by the FSB, which presented a four -point action plan to G20 leaders in 
November 2015 with a view to assessing and addressing the decline in correspondent banking. In 
March last year, the FSB established t he Correspondent Banking Coordinati on Group (CBCG)  to 
coordinate implementation of the action plan. The CBCG was composed of senior representatives 
from international organizations and standard setters  (including CPMI)  and national authorities in 
the FSB and its Regional Consultative Groups . Two of the four CBCG's work streams, namely work 
streams 1 (data collection/analysis) and 4 (strengthening tools for due diligence by correspondent 
banks) were chaired by the CPMI. The CPMI also participated as observer in the FATF Policy 
Development Gro up.  
1.12.   Finally, the CPMI representative turned to recent developments in cross -border payments. 
Keeping up -to-date with these developments was also a task of the CPMI. He said in that regard 
that most cross -border retail payments were inefficient and costly,  and offer ed limited solutions to 
consumers. That situation had not changed despite the development of Internet, global 
communications, mobile technology and the push towards global financial standards. While there 
were no real technological barriers to the provision of efficient and cost -effective cross -border 
payment solutions, very few solutions actually exist ed. Against  this background , and given the role 
of central banks in promoting efficient payment systems, further work by the CPMI could benefit 
both policymakers and markets.  
1.13.   The representative of Nigeria  said that there was no denying that financial inclusion had 
become a policy priority, particularly in developing countries. Given the challenges faced by 
developing economies, including insufficien t infrastructure and technological delay, he asked the 
CPMI representative for his assessment – and recommendations – regarding the measurement of 
the effectiveness of financial inclusion efforts.  
1.14.   The representative of the CPMI shared those concerns. He s aid in that regard that keeping  
track of financial inclusion implementation efforts was essential to determine whether the actions 
adopted were effective in helping achieve the underlying objectives. A consensus had grown  within  
the financial inclusion com munity in recent years on the importance of developing a robust  
measurement methodology for this purpose.  In that regard, chapter 5 of the PAFI report jointly 
elaborated by the CPMI and the World Bank was actually devoted to this issue, and discussed the 
development of a results framework as the basis for measuring  progress and success in the 
achievement of financial inclusion objectives, in particular those deemed more relevant from a 
payment perspective. He encouraged Members to have a look at the Report for further 
information.  
1.15.   The Chairperson  enquired about the p otential role of governments in advancing financial 
inclusion through the development of e -government payment programs, namely the adoption of 
electronic mechanisms to collect P2G (person -to-government) and B2G (business -to-government) 
payments, such as taxes. In that regard, the PAFI report mentioned that creating incentives, e.g. 
offering VAT rebates to those using electronic payments, could  constitute effective policy tools to 
promote financial  inclusion. She asked whether the CPMI representative could elaborate further on 
this issue.   S/FIN/M/ 91 
 
- 4 - 
 
  1.16.   The representative of the CPMI said that government payments were indeed a catalyst for 
financial inclusion. As explained in the PAFI report, P2G and B2G experie nces in a number of 
economies showed that robust e -government programs fostered the use of electronic payments, 
thus improving the efficiency of public administrations, business, individuals and national payment 
systems.  
1.17.   In concluding, the Chairperson  thanked Mr. Shimizu , and through him , the CPMI 
Secretariat, for participating in th e meeting of the Committee. The CPMI presentation had been  
very thorough and informative , and had allowed Members to better understand how the CPMI's 
work related to various is sues of interest to the Committee. She added that the Secretariat w ould 
contact the other international standard -setting agencies to continue with these rounds of 
presentations and discussions throughout the year.  
1.18.   The Committee took note  of the statements made  and decided  to revert to this agenda item 
at the next meeting . 
2  ITEM B  – TRADE IN FINANCIAL S ERVICES AND DEVELOPM ENT  
2.1.  The Chairperson  said that, as  shown by past discussions, the issue of Financial Inclusion was 
of the highest importance to all Members  and to th e Committee. Ample information on trade -
related aspects of financial inclusion ha d already been provided in the Background Notes by the 
Secretariat  on Financial Inclusion and the GATS (S/FIN/W/88) and Barriers to Financial Inclusion 
and Trade in Services (S/FIN/W/88/Add.1). As evidenced by  those  Notes, and also by the 
presentation made by the CPMI  at this meeting , payment systems were crucial for financial 
inclusion. In particular, document S/FIN/W/88/Add.1 had provided a number of real -life examp les 
of how payment -related initiatives (e.g., mobile payments and financial services, payment banks, 
mobile cross -border remittances) contribute d to financial inclusion.  
2.2.  She then turned to China and Costa Rica, who had requested the addition of two agenda sub-
items related to payments services.  
2.3.  The representative of China  said that his delegation was interested in discussing payment 
services directly supporting cross -border trade in goods enabled by the Internet. Without these 
payment services, business pe ople c ould hardly complete transactions related to  cross-border 
trade in goods enabled by the Internet. It would be interesting in that regard to learn more about 
Members' current regulatory practices in that area. He wondered, for example, whether there w as 
any difference, from a regulatory perspective, between payment services provided by banks and 
payment services provided by third party platforms , and whether the  term "fast retail payment 
systems " was the same as " payment services provided by third part y platforms ".  
2.4.  He also took the opportunity to thank the Friends of E -commerce for Development  for the 
organization of the seminar on digital payments earlier that week. In his view, a n important take -
away from the seminar was that e -payment  was a powerful  tool for overcoming the digital divide, 
foster ing robust domestic market s, and boosting international trade.  
2.5.  The representative of Costa Rica , speaking on behalf of  the Friends of E -commerce for 
Development  or FED  (Argentina, Chile, Colombia, Costa Rica,  Kenya, Mexico, Nigeria, Pakistan, 
Sri Lanka and Uruguay) , said that his delegation had requested the inclusion of this item in the 
agenda of the meeting in order to  inform this Committee about the discussions  held during the 
Seminar on ePayments and Finan cial Inclusion organized by this group of Members on 13 March  
2017, and to which all Members had been invited.    
2.6.  Financial  inclusion  was a fundamental ingredient of development and this  seminar had been  
part of the FED's goal to provide developing Members , especially LDCs, with more information on 
how to foster e -commerce. The seminar had been opened  by Costa Rica's Minister of Foreign 
Trade , and the keynote remarks delivered by the WTO Director -General. The Seminar had been  
structured around  four sessions  and covered a broad range of topics, from the development 
outcomes of using digital payments and remittances, to the contribution of new  payment models 
and the use of mobile applications to financial inclusion. The role of statistics in payments and 
mobil e money had also been addressed in the discussions. Private sector representatives  had S/FIN/M/ 91 
 
- 5 - 
 
  elaborated on the factors that motivated digital financial service providers to offer their services in 
developing economies.  
2.7.  Participants  had further  explored  issues r elated to  the use of mobile -enabled payment 
systems in re mote areas, especially in LDCs , as well as the overall contribution of new p ayment s 
models to financial inclusion . Experiences from developing countries (Kenya and Pakistan, among 
others) had also been shared.  Participants had also explored the existing initiatives to improve 
digital economy statistics , particularly in the area of payments and mobile money.   
2.8.  Finally, he informed Members that the presentations delivered at the seminar would be 
downloa dable from the WTO website. In addition, a recorded webcast of the seminar would be 
available in YouTube, at the Lists of Costa Rica's Trade Ministry channel, called 
COMEXcomunicacion.  
2.9.  Before offering the floor to Members, the Chairperson  suggested that in  commenting on the 
issues raised by China and Costa Rica, delegations also considered and provided views on how to 
take these issues forward. In that regard, she reminded Members of her suggestion at past 
meetings to build on the Secretariat Notes, in part icular on section 4 in the Addendum, and further 
consider how trade policy and regulation m ight be improved so as to better contribute to financial 
inclusion. She added that Members might per haps look in more detail into the issue of digital 
payments.  
2.10.   The representative of Nigeria  said that experience sharing could be very beneficial. One 
option would be to include a section devoted to these issues in Members' Trade Policy Reviews. It 
was up to each Member to consider that possibility. A second option for f uture work would be to 
look into best practices. In any case, his delegation was willing to discuss how to conduct further 
work on these issues.  
2.11.   The representative of Pakistan  said that, according to the World Bank, 2 billion adults 
worldwide lacked a bas ic bank account. Globally, 59% of adults without an account had cited the 
lack of enough money as the key reason, which implied that financial services were neither 
affordable nor designed to cater for th e needs of certain low income users. Other barriers to 
account opening included distance from a financial service provider, lack of necessary 
documentation, and lack of trust in financial service providers. Some groups, such as women, the 
rural poor, and informal small and micro firms, were more financially  excluded than others. 
Furthering financial inclusion contributed to economic growth, social inclusion, and prosperity. In 
Pakistan's view, the financial inclusion equation could never be complete without an efficient 
payment system. One of the most import ant functions of payment systems was to enable and 
support cross-border trade in goods enabled by the Internet . In that respect, his delegation 
supported the statement made by China. Furthermore, as a member of the FED group, Pakistan's 
interest was to enh ance Members' understanding on these subjects through experience sharing.   
2.12.   The representative of the European Union  thanked the FED group for organizing the 
seminar. She said that e -payments were relevant for trade in both goods and services. From that 
perspective, her delegation was willing to further discuss these issues.  
2.13.   The Chairperson  said that certainly information sharing was important. She suggested that 
Members could volunteer to share their experiences with regard to e -payments and financial 
inclusion.  
2.14.   The representative of Nigeria  said that  ideally, such experience sharing should take place in 
the context of a dedicated discussion. In that regard, the Chair could further explore whether 
provision could be made to bring experts from a large and r epresentative sample of Members. If 
that was not possible, an alternative option would be to have that experience sharing in the 
context of regular meetings, leaving it  up to each Member to  volunteer to participate. Having said 
that, Members should further  consider what could be done beyond sharing national experiences or 
information on best practices.  
2.15.   Summing up the discussion, the Chairperson  agreed with Nigeria that, while important in 
itself, information sharing was not enough, and the Committee should  further consider what could 
be done beyond information or experience sharing with regard to the issues mentioned. In her S/FIN/M/ 91 
 
- 6 - 
 
  view however, there was a lack of clarity as to the intention of Members, including those who 
made suggestions at this meeting.  
2.16.   She s uggested a two -track approach. On the one hand, she encouraged Members to 
volunteer to share their national experiences or information on best practices, particularly on 
regulatory issues. In parallel, she would consult with interested Members  on how to ta ke these 
issues forward. It was so agreed . 
2.17.   The Committee took note  of the statements made and decided  to revert to this agenda item 
at the next meeting.  
3  ITEM C - RECENT DEVELOPMENTS IN FINANCIAL SERVICE S TRADE  
3.1.  The Chairperson  recalled that , at the last mee ting, Jamaica (on behalf of CARICOM)  had 
submitted a draft proposal for a seminar on de -risking and correspondent banking 
(JOB/SERV/244). Discussion on the proposal had taken place in informal mode. As a result of that 
discussion, it had become  clear that further consultations among interested parties were 
necessary. She then invited Jamaica to provide an update on developments since the last meeting.  
3.2.  The representative of Jamaica  said her delegation had had consultations with other interested 
delegations on the issue of the seminar. The engagement in the consultations had been v ery 
constructive . A number of misunderstanding s had been clarified and different options discussed.  
The latter were being considered  by the respective authorities. She finally added  that she would 
report on any additional development at future meetings.  
3.3.  The Chairperson  said that as indicated by J amaica , further consultations among interested 
parties were still necessary, and would take place in due course.  
3.4.  The Committee took note  of the statements made and decided  to revert to this agenda item 
at the next meeting.  
4  ITEM D – FUTURE WORK AND TIMI NG OF THE NEXT MEETI NG 
4.1.  The Chairperson  said that in her view there were substantive items for consideration by the 
Committee, including the forthcoming presentations by international standard -setting agencies. 
She suggested , therefore , that the Committee meet again during the next cluster of services 
meeting . It was so agreed . 
5  ITEM E – OTHER  BUSINESS  
5.1.  There  were no issues raised under Other Busin ess. 
 
__________