CPMI calls for ideas on solutions to expand PvP settlement

Press release  | 
07 October 2021

Settling FX trades can lead to significant principal risk exposures when one counterparty to a trade sends a currency payment to the other counterparty before receiving the currency it is buying. Payment-versus-payment (PvP) mechanisms, which ensure that the final transfer of a payment in one currency occurs if and only if the final transfer of a payment in another currency or currencies takes place, can significantly mitigate principal risk.

The 2019 BIS Triennial FX survey (Triennial) shows that FX settlement risk remains significant: with the proportion of total trades settled globally with PvP protection estimated to be below 40%. Expanding PvP settlement to a wider range of transactions would reduce FX settlement risk, support global financial stability and potentially help to lower the costs of cross-border payments that involve currency exchange.

As part of the G20 cross-border payments roadmap, the Committee on Payments and Market Infrastructures (CPMI) is developing proposals for increased PvP adoption by encouraging enhancements to existing PvP arrangements and/or the design of new public and/or private sector solutions. As a starting point, the CPMI is inviting interested parties, including commercial banks, e-money operators and other fintech companies, to share their views on potential solutions.

Interested parties are asked to provide their thoughts on existing, planned or possible future solutions to expand PvP settlement to a wider range of transactions. Responses could address any of the following questions:

  • How would the solution achieve PvP?
  • What FX products and currency pairs would the solution be well-suited and/or designed to settle?
  • Which aspects of the solution would incentivise and broaden user participation?
  • What challenges faced by the market related to settling cross-border wholesale deliverable FX payments would the solution address and how would it do so (eg, geographical limitations and time-zone differences; liquidity availability; funding, operational and processing costs; access to payment systems; reconciliation and visibility of funds)?
  • What roles can the public sector and private sectors play in the solution?

All submissions should be in English and ideally not exceed 10 pages. Each submission should clearly mention the question(s) addressed, as well as the name and e-mail address of a contact person for inquiries. The information provided will assist the CPMI in facilitating the increased adoption of PvP under Building Block 9 of the Cross-border payments programme, see FSB (2020) p. 22. The CPMI may follow up with submitters on a bilateral basis to seek additional information on their proposals. Individual responses will not be published without prior consent.

Parties wishing to engage with the CPMI should e-mail their responses to cpmi@bis.org with "PvP Proposal" in the subject line by Friday 12 November 2021.

Update on 11 November: deadline has been extended to 26 November.

The CPMI will hold a Q&A workshop for engaging parties to ask follow-up questions on this request before submitting their responses. The workshop is scheduled for Friday 5 November 2021 at 13:00 – 14:00 CET via WebEx.
Parties wishing to be invited to the workshop should e-mail a request to cpmi@bis.org with "PvP Workshop" in the subject line by Tuesday 2 November 2021.

Further information on the CPMI cross-border payments programme can be found here: