This consultation report sets out proposed policy recommendations to strengthen consistency in the regulation and supervision of banks and non-banks in their provision of cross-border payment services in a way that is proportionate to the risks associated with such activities. Greater consistency supports an environment that facilitates reduced costs, increases delivery speed and improves financial access and transparency. This approach reduces the prospect of regulatory arbitrage by establishing a level playing field, to the extent possible given differences in business models and risk profiles, for both banks and non-bank PSPs.

The report provides an overview of the role of banks and non-banks in cross-border payments; discusses the relevant frictions and risks; defines the principles identified based on the analysis conducted in the report, which frame the boundaries of the report’s recommendations; and proposes specific recommendations for strengthening consistency in regulating and supervising banks and non-banks in their provision of cross-border payment services.

The FSB invites comments on this consultation report and welcomes replies to the questions set out below. Responses will be published on the FSB’s website unless respondents expressly request otherwise.

Questions for consultation

Introduction

  1. Do the definitions contained in the report provide sufficient clarity and establish the common understanding necessary to facilitate the practical implementation of recommendations proposed in this report?

  2. What adjustments are required to the draft definitions to improve clarity?

  3. What other terms should be defined in this section?

  4. Does the explanation regarding the scope of the report provide sufficient clarity to promote the intended understanding of the recommendations?

Section 1: The role of banks and non-banks in cross-border payments

  1. Do the descriptions of the roles of banks and non-banks in providing cross border payment services adequately reflect current practices?

Section 2: Cross Border Payment Frictions and Risks

  1. What additional risks or frictions, within the scope of this report, are created by potential inconsistencies in the legal, regulatory and supervisory frameworks applicable to banks and non-banks in their provision of cross-border payment services?

Section 3: Principles for developing recommendations

  1. Do the identified principles provide sufficient support and appropriately frame boundaries for the recommendations in the report?

Section 4: Recommendations for improving alignment of PSP regulatory and supervisory regimes

  1. Are the recommendations sufficiently granular, actionable, and flexible to mitigate and reduce frictions while accommodating differences in national legal and regulatory frameworks and supporting the application of proportionality?

  2. To what extent would the recommendations improve the quality and consistency of regulation and supervision of non-bank payment service providers (PSPs) active in cross-border payments services?

  3. For the purpose of identifying material areas to be addressed from a priority and effectiveness perspective, should the report categorise the identified frictions created by inconsistencies in the legal, regulatory and supervisory frameworks applicable to banks and non-banks in their provision of cross-border payments services in terms of focus or order in which they should be addressed?

  4. Recommendation 5 focuses on domestic licensing. How and to what extent would licensing recognition regimes between jurisdictions support the goal of strengthening consistency in the regulation and supervision of banks and non-banks in their provision of cross-border payment services? What risks need to be considered?

  5. There are no comprehensive international standards for the regulation, supervision and oversight of non-bank PSPs and the cross-border payment services that they offer. Is there a need for such international standards?

General

  1. What, if any, additional issues relevant to consistency in the regulation and supervision of banks and non-banks in their provision of cross-border payment services should be considered in the report?

Responses should be submitted via this secure online form by 9 September 2024.
Please contact the FSB ([email protected]) if you have questions.