According to a U.S. Treasury official, India's Unified Payments Interface system (UPI) is unique in that it is fostering bilateral ties with other nations, such as Singapore and the United Arab Emirates. Jay Shambaugh, Under Secretary of US Treasury for International Affairs, discussed emerging technologies and cross-border payments on Wednesday at Harvard Law School. According to him, a number of ASEAN nations aspire to multilaterally connect their rapid payment systems.
According to Mr. Shambaugh, there are already a number of projects in motion to modernise outdated payment methods. He stated that in order to make their systems faster, more affordable, transparent, accessible, and efficient for individual or financial sector customers, payment service providers, system operators, banks, and FMIs are investing in operational enhancements.
Institutions worldwide, for instance, are now varying in their use of the ISO 20022 communications standard. In addition to facilitating straight-through payment processing with quicker messaging, reduced payment failure rates, and other benefits, this standard is more data-rich than its predecessors, Mr. Shambaugh said. "Some nations with robust bilateral trade ties are going one step further and connecting their quick payment networks. According to him, India is a leading nation in the development of bilateral connections between its Unified Payments Interface system and other nations' systems, such as Singapore's and the United Arab Emirates'.
A number of ASEAN nations aspire to multilaterally integrate rapid payment systems. The 'G20 Payments Roadmap' has directed efforts towards prospects for concrete, immediate change in both situations, according to Shambaugh. He emphasised that "payment system interoperability and extension," which guarantees the facilitation of "better payment system connectivity and operational alignment along key corridors," is one of the three priority action areas of this G20 plan.
When accomplished, this allows for the instantaneous settlement and transfer of funds across systems. Additionally, he stated that monitoring initiatives carried out under the G20 Roadmap demonstrate that improvements to legacy systems—including those that existed before the G20's payments work—have already started to yield fruitful outcomes.
According to Mr. Shambaugh, in parallel, other countries are investigating potential futures for money and payments, such as testing out DLT-based payments and cross-border CBDCs. "Though the actual situation could be more complicated, new technologies in this field theoretically offer the chance for payment systems to start over. In a perfect world, we could employ these technologies to create cross-border payment systems that had all the advantages of legacy systems plus a few extra capabilities that they don't offer," he continued.
"These further features might be programmable payments, atomic, immediate settlement, and transparency of expenses and institutions in the payment chain. The US Treasury official stated, "Taken together, these features may help us accomplish our two main objectives of lowering risk and raising efficiency.
