Facilitating Increased Adoption of Payment Versus Payment (PvP)

Categories : Customer and uses of digital payments, International Remittances

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Author: Bank of International Settlements

This BIS consultative report – issued as part of the G20 cross-border payments programme – focuses on facilitating increased adoption of payment versus payment (PvP) to reduce foreign exchange settlement risk and improve cross-border payments. The report analyses the causes of non-PvP settlement, takes stock of existing and proposed new PvP solutions and suggests roles for the private and public sectors to facilitate PvP adoption.

The CPMI conducted a survey of five existing PvP arrangements and issued a call for ideas on new proposals for PvP settlement that yielded 16 responses from a range of interested parties, including existing infrastructures, global banks, new entrants and industry groups.

Based on an analysis of the industry input, the report finds that while existing PvP arrangements are available for the most-traded currency pairs and products, these solutions are not attractive to all potential users. New PvP solutions can complement the existing arrangements by expanding coverage to the retail market, and providing flexibility and functionalities such as real-time settlement or 24/7 operations, as well as supporting emerging market currencies. However, PvP arrangements face barriers to broad adoption. It is therefore key for private and public sector stakeholders, including central banks, to take on various roles to reduce these barriers.