On August 28, a Fed Governor Christopher Waller discussed the interplay between public and private sectors in advancing cross-border payments in a speech given at the Global Fintech Fest in Mumbai, India. He highlighted India’s success in financial inclusion through public-private partnerships and noted that interlinking fast payment systems globally could make cross-border payments faster and cheaper. He also cautioned that such interlinking poses significant legal, compliance and operational challenges.

Waller noted that private-sector innovations have already improved cross-border payments but emphasized the need for economic viability in any new public-sector initiatives. He also expressed the view that “not all frictions that slow payments down are bad,” as “[c]ertain frictions are purposely built into the global payment system for compliance and risk management reasons.” As an example, Waller noted that slowing down the speed of payments helped banks prevent money laundering and fraud and can help inhibit the funding of terrorism.

Waller also discussed low-cost international ACH payments and the cautious approach the Fed would intake any new interlinking arrangements. He stressed the importance of building robust domestic payment networks before considering global interlinked networks. Finally, Waller supported the Fed’s efforts to improve cross-border payments through ongoing engagement with international entities and domestic systems like the FedNow Service.