Federal Reserve governor Christopher Waller has expressed caution regarding the push to interlink national fast payment systems, emphasizing that the US is prioritizing the development of its FedNow network on a domestic level.
The interconnection of fast payment systems is a key element of the G20 roadmap aimed at enhancing cross-border payments. Some countries have established bilateral agreements, while others are exploring possibilities through various BIS projects.
Speaking at an event in India, Waller raised concerns about the urgency for expedited cross-border payments. He noted, “Not all frictions that slow payments down are bad. Certain frictions are intentionally incorporated into the global payment system for compliance and risk-management purposes. Slower payment clearing and settlement processes assist banks in preventing money laundering, countering the financing of terrorism, detecting fraud, and recovering misdirected cross-border payments.”
Additionally, Waller mentioned that consumers often prefer to delay payments for their purchases. He remarked, “I am still left with the larger question of whether we should be incentivizing faster cross-border payments.”
The governor also pointed out the complexities involved in linking diverse payment systems, highlighting that Brazil, India, and the US operate under vastly different models. He warned that “achieving interoperability is not simple,” stating that while technology may be one of the easier aspects, legal, compliance, settlement, and governance challenges are greater hurdles.
In summary, Waller acknowledges the potential for a public sector role in improving cross-border payments but reaffirms that the primary focus in the near to mid-term is on advancing the FedNow network domestically and enhancing participation in this service.