Can multilateral platforms improve cross-border payments?

Key takeaways

• For decades, cross-border payments were the forgotten corner of the world's financial plumbing. But in 2020, the G20 countries decided, as a global priority, that these payment systems should be improved, acknowledging that people and economies worldwide stand to benefit from faster, cheaper, more transparent and more inclusive cross-border payment services. Multilateral platforms, ie payment systems across multiple jurisdictions, were seen as having a possible role to play in this.
• Defining the features of a payment system, setting up its governance and conducting a cost-benefit analysis are demanding enough even within a single jurisdiction. Involving multiple jurisdictions with different legal frameworks and many more stakeholders only increases the complexity. With the high investment costs of establishing a multilateral platform, any such initiative should be based on a thorough analysis of the pros and cons.
• In this article, we provide an update on the work to investigate if there could be a role for multilateral platforms in improving cross-border payments. Overall, multilateral platforms seem capable of alleviating some of the frictions that affect those payments. Yet, there are also challenges and barriers that will need to be overcome if platforms are to be established, as well as risks to be assessed. Further analysis will focus on various options for multilateral platforms and it will be complemented by market input.