for release on delivery 2 : 00 a. m. est ( 9 : 00 a. m. local time ) february 15, 2024 advancing cross - border payments and financial inclusion remarks by michelle w. bowman member board of governors of the federal reserve system at 19th bcbs - fsi high - level meeting for africa cape town, south africa february 15, 2024 introduction thank you to the financial stability institute of the bank for international settlements and especially to its chair, fernando restoy for the invitation to speak about these important topics. 1 i ’ d also like to thank the south african reserve bank for hosting this gathering. it is a pleasure to join you in cape town, and i am delighted to speak with you about advancing crossborder payments and financial inclusion. i find great value in engaging with and learning from our international colleagues on these international and domestic issues. we are all participants in a global and interconnected financial ecosystem, and payments are a vital component of this system. the payments landscape continues to evolve, through infrastructure upgrades, innovation, changing consumer preferences, and advancements in both the public and private sectors. faster, cheaper, more transparent, and more inclusive crossborder payment services offer widespread benefits for citizens and economies around the world, with the potential to support economic growth, international trade, global development, and financial inclusion. this global ecosystem is comprised of individual jurisdictions, each with its own history, public policy objectives, payment infrastructures, and regulatory environments. within these independent economies exist a wide range of businesses and consumers, all with vastly different needs and requirements. as policymakers, we must consider not only how to foster safe, efficient, and accessible payment and settlement infrastructures to support the broader financial system but also how those same systems and infrastructures can support the needs of consumers, businesses, and financial service providers. this includes support for responsible innovation and thank you to priyanka slattery and alex sproveri of the federal reserve board for their assistance in preparing this text. the views expressed here are my own are and not necessarily those of my colleagues on the federal reserve board. - 3enabling providers, such as banks and other nonbank financial service providers, to meet the evolving needs of their customers. in many cases, the policy tradeoffs we face domestically are amplified in the cross - border context. to foster safety and efficiency in the payment system, it is imperative to seek improvements that support an accessible and inclusive system that works for the broad spectrum of

and most liquid assets, of which, these researchers argue, there is a relative shortage in emerging markets. 3 my paper confirms empirically that the global saving glut countries – principally, some emerging asian economies and middle eastern oil exporters – did indeed evince a strong preference for very safe and liquid u. s. assets in the middle of the past decade, especially treasury and agency securities. although a large share of the net capital inflows to the united states came from emerging markets, substantial gross capital inflows were received from the advanced economies as well. an additional contribution of the paper is to examine the portfolio preferences of these advanced economy, especially european, investors. the paper finds that, like the global saving glut countries, european investors placed a high value on safety and liquidity in their u. s. investments ; however, relative to purchases by emerging markets, those of european investors encompassed a broader range of u. s. securities, including sizable amounts of private - label mortgage - backed securities ( mbs ) as well as other highly rated asset - backed securities. unlike the global saving glut countries, which funded their acquisitions of u. s. assets through their current account surpluses, europe on net had a roughly balanced current account and thus issued liabilities to fund acquisitions of u. s. assets. however, as these liabilities were tilted toward more traditional securities, including sovereign debt, as well as bank deposits, the result here too was a net increase in the global demand for highly rated u. s. assets. the preferences of foreign investors for highly rated u. s. assets, together with similar preferences by many domestic investors, had a number of implications, including for the relative yields on such assets. importantly, though, the preference by so many investors for perceived safety created strong incentives for u. s. financial engineers to develop investment products that “ transformed ” risky loans into highly rated securities. remarkably, even though a large share of new u. s. mortgages during the housing boom were of weak credit quality, financial engineering resulted in the overwhelming share of private - label mortgage - related see ben s. bernanke ( 2005 ), “ the global saving glut and the u. s. current account deficit, ” speech delivered at the sandridge lecture, virginia association of economists, richmond, va., march 10 ; and ben s. bernanke ( 2007 ), “ global imbalances : recent developments and