Jerome H Powell: Closing remarks - "Pushing the frontiers of
payments: towards faster, cheaper, more transparent and more
inclusive cross border payments"
Speech (via prerecorded video) by Mr Jerome H Powell, Chair of the Board of Governors of the
Federal Reserve System, at "Pushing the frontiers of payments: towards faster, cheaper, more
transparent and more inclusive cross border payments", a conference hosted by the Committee
on Payments and Market Infrastructures, Basel, Switzerland, 18 March 2021.
* * *
I would like to thank Sir Jon Cunliffe and the Committee on Payments and Market Infrastructures
(CPMI) for inviting me to close out the first day of this conference on pushing the frontiers of
payments.
Last year, the Group of Twenty (G-20) asked the Financial Stability Board (FSB) to coordinate the
development of a roadmap on how the global community could enhance cross-border payments.
It has long been acknowledged that the existing system, while safe and dependable, suffers from
frictions, including processes that make it difficult to comply with anti-money-laundering and
countering-terrorist-financing requirements, difficulty in managing payments across time zones,
and, in certain areas, a reliance on outdated technology. Moreover, these frictions contribute to
higher costs for cross-border transactions.
As with many aspects of life these days, the COVID-19 pandemic has shined a light on the less
efficient areas of our current payment system and accelerated the desire for improvement and
digitalization. Even before the pandemic, advancements in the private sector served as a catalyst
to get the attention of consumers and to prompt more engagement by the public sector.
The goal of the FSB roadmap is simple-to create an ecosystem for cross-border payments that
is faster, cheaper, more transparent, and more inclusive. A year into the process, I am
encouraged that we are making meaningful progress. The stage 3 report released in October laid
out a practical set of steps for moving ahead on the 19 building blocks that will bring about an
1
improved system.
Indeed, the themes discussed in the four sessions of the conference today correspond well to
approaches described in the building blocks. The title of the first panel sets up a choice between
"improving existing rails or laying new tracks." As the roadmap makes clear, one of the keys to
moving forward will be doing both-improving the existing system where we can while also
evaluating the potential of and the best uses for emerging technologies. As an example, the
Federal Reserve is working to improve the current system through the introduction of instant or
2
fast payments via the FedNow Service. The service will be designed to maintain uninterrupted
processing-24 hours a day, 7 days a week, 365 days a year-with security features that will
ensure payment integrity and data security. The target launch date is sometime in 2023.*
The Federal Reserve is also doing its part to examine the role of new technologies. Experiments
with central bank digital currencies (CBDCs) are being conducted at the Board of Governors, as
well as complementary efforts by the Federal Reserve Bank of Boston in collaboration with
researchers at MIT. In addition, a recent report from the Bank for International Settlements and a
group of seven central banks, which includes the Fed, assessed the feasibility of CBDCs in
3
helping central banks deliver their public policy objectives. Relevant to today's topic, one of the
three key principles highlighted in the report is that a CBDC needs to coexist with cash and other
types of money in a flexible and innovative payment system.
Improvements in the global payments system will come not just from the public sector, but from
the private sector as well. As today's second panel, "Of Lions and Unicorns," described, the
private sector has the experience and expertise to develop consumer-facing infrastructure that
improves and simplifies how the public engages with the financial system. Digitalization of
financial services, combined with an improved consumer experience, can help increase financial
inclusion, particularly in countries or areas with a large unbanked population.
And the last two panels of the day, "Addressing Legal Barriers to Cross-Border Payments" and
"Harmonised Data to Oil the Cross-Border Payments Machinery," highlight that improving the
system must be a collaborative effort. By definition, cross-border payments involve multiple
jurisdictions. So it will only be through countries working together, via all of the international
forums-the Group of Seven, the G-20, the CPMI, the FSB, and others-that solutions will be
possible.
And, finally, it is only by engaging all stakeholders-policymakers, private-sector participants, and
academia-as this conference is doing, that we will achieve the improved payments ecosystem
we are striving toward.
The COVID crisis has brought into even sharper focus the need to address the limitations of our
current arrangements for cross-border payments. And as this conference amply demonstrates,
despite the challenges of this last year, we still have been able to make important progress. I
again thank the CPMI and Jon Cunliffe for their leadership and look forward to working together
as we improve these payments for businesses and individuals alike.
* This sentence was updated after publication: the phrase "sometime in late 2023 or 2024" was
updated to "sometime in 2023".
1
See Financial Stability Board (2020), Enhancing Cross-Border Payments: Stage 3 Roadmap (PDF) (Basel,
Switzerland: FSB, October).
2
See Board of Governors of the Federal Reserve System (2020), "Federal Reserve Announces Details of New
24x7x365 Interbank Settlement Service with Clearing Functionality to Support Instant Payments in the United
States," press release, August 6.
3
See Bank for International Settlements (2020), "Central Banks and BIS Publish First Central Bank Digital
Currency (CBDC) Report Laying Out Key Requirements," press release, October 9.