Synchronising instant payment systems to improve cross-border payment execution

Abstract

Although instant payment systems have been successfully launched the world over, to date they have had only a local or regional impact. This paper presents the case for leveraging local instant payment systems to enhance cross-border payments. Specifically, it argues that by connecting the instant payment systems in both sending and receiving currency zones, and synchronising settlement between these systems, it should be possible to obtain a cross-border payment experience that aligns closely with that of domestic and regional instant payment systems in terms of speed, certainty and predictability. The paper describes the first practical steps taken by EBA CLEARING, The Clearing House and SWIFT to realise an immediate cross-border payment concept in the US dollar and euro corridor, which could be replicated across other currency corridors and instant payment systems. While much has already been done to take cross-border payments to the next level, there remain a number of frictions that will require both private and public sector action.