Private sector-led blockchain-based networks and stablecoins could fix "slow, opaque and inefficient" cross-border payments, says Monetary Authority of Singapore managing director Ravi Menon.
Improving cross-border payments has become a global political priority since Saudi Arabia made it a central plank of its G20 presidency. This week, the Financial Stability Board published priority themes for the next phase of the G20 roadmap on the issue.
In a keynote speech at Swift's Sibos conference, Menon offered his own thoughts on the challenge, exploring three possible ways to solve it: linking up faster payments systems; building a multi-CBDC common platform; and expanding private sector blockchain-based payment networks.
Menon argues that the use of distributed ledgers for cross-border settlement need not be confined to CBDCs. Securely-backed stablecoins or tokenised bank deposits issued by private sector players can also be used to enable cheaper and faster cross-border payment and settlement.
The MAS chief notes that USD Coin and the Pax Dollar are already beginning to scale, expanding their networks and partnerships with traditional finance firms. Meanwhile, Visa has integrated stablecoins into its services.
On a multi-CBDC common platform, Menon notes that BIS is already exploring such a network, enabling commercial banks to transact with foreign counterparties without going through correspondent banks.
The BIS Innovation Hub is carrying out a host of experiments with different central banks, including MAS.
"These initiatives by the private and the official sector will help to achieve cheaper, faster and more transparent cross border payments and settlements internationally, and ultimately improving the lives of people," predicts Menon.