The development and implementation of safe, reliable and efficient national payments systems and Financial Market Infrastructures (FMIs) is a crucial component of the World Bank Group’s work to reduce poverty and boost shared prosperity. Secure, affordable, and accessible payment systems and services help expand financial inclusion, foster development and support financial stability.
Payment systems and FMIs are the mechanisms established to facilitate the clearing and settlement of monetary and other financial transactions. Safe, reliable and efficient payment systems and FMIs:
- Support financial stability by mitigating risks related to financial transactions and facilitating the smooth flow of payments and efficient functioning of financial markets.
- Promote efficiency in the economy by facilitating the smooth flow of payments underpinning economic activity and promote financial sector development through fostering consumers’ confidence in the use of money and payment services.
- Enable access to transaction accounts as a means to safely store value, and make and receive payments, thus helping to fulfill the World Bank Group’s vision of Universal Financial Access (UFA) by 2020 and foster financial inclusion.
- Foster transparency and efficiency in the international remittances markets.
- Support the digitization of Government payments as part of cross-cutting work in areas like Social Protection, eGovernment and Public Financial Management reforms. The work spans across the revenue collection and expenditure side, including large scale programs like tax collection, public sector salary payments, public procurement and other Government to Person (G2P) payments.
- Underpin critical reforms in fragile and conflict-affected states helping to kick-start economic activity and implementation of social protection programs for the vulnerable and help deliver cash transfers in the aftermath of natural disasters to facilitate relief efforts.
The World Bank works to improve the safety, reliability and efficiency of payment systems and FMIs by providing financial and technical assistance and policy advice to client governments. The Bank contributes to international standard-setting, assessment and implementation. The Bank also advances and disseminates payment-system knowledge.
World Bank financial and technical assistance spans the entire breadth of the national payments system and FMIs, such as the institutional and infrastructure arrangements in a financial system for initiating and transferring monetary claims – from the legal foundations, to payment, securities and derivatives settlement infrastructure, technical standards, market structure and competition, oversight, and cooperation. This includes the adoption of new technologies and new approaches like the rapidly evolving FinTech developments like faster payments, Open APIs, QR code and distributed ledger technologies for efficiency and inclusion.
Increasingly new forms of financial infrastructure like Digital ID infrastructures for financial sector, KYC registries, Bill payment infrastructures, Receivables and e-invoicing platforms are getting closely linked to payment and market infrastructures. Support for these new types of financial infrastructures are also included in World Bank financial and technical assistance programs.
Over the last decade we have supported over 120 countries on the topics of payments, remittances and market infrastructures, through advisory services and lending projects. We conduct diagnostics, formal assessments against prevalent standards and guidelines, design strategies, finance procuring new systems and upgrading existing systems, advise on the enabling legal and regulatory frameworks, help strengthen oversight and cooperative arrangements, create a conducive environment for adoption of new technologies and approaches without negatively impacting the safety and soundness of the financial system and facilitate regional harmonization and integration of payments and market infrastructures.
International Remittances Cost Reduction and Monitoring
To support the global remittances agenda whose core is the implementation of the WBG-CPMI Principles for International Remittance Services (Global Principles), the WBG: (i) steers the global debate through the Global Remittances Working Group; (ii) monitors the cost of international remittance services through the Remittance Prices Worldwide (RPW) database and disseminates knowledge; (iii) promotes innovative approaches to implementing the GPs and to undertaking remittances reforms, including through Project Greenback 2.0, which promotes change inspired by the real needs of the ultimate beneficiaries of international money transfers, the migrants and their families at home; (iv) undertakes regional demand and supply-side surveys of migrants and remittance service providers, respectively; and, (v) undertakes assessments of the remittance markets against the Global Principles.
Global Setting and Implementation of Standards for Financial Market Infrastructures and Payment Systems
The World Bank actively participates in several standard-setting initiatives led by the Committee on Payments and Market Infrastructures (CPMI) of the Bank for International Settlements (BIS) and the International Organization of Securities Commissions (IOSCO). The World Bank, together with CPMI, is a standard-setter in the area of international remittances and co-chaired a task force that issued guidance on the “Payment Aspects of Financial Inclusion.” The World Bank is the leading implementation agency of international standards through formal assessment – such as the Financial Sector Assessment Program (FSAP) – and technical assistance.
As part of engagements with the standard setters, the team has been engaged in the development of significant update of the international standards for payment and settlement systems based on a comprehensive review of the standards post the 2008 financial crisis. The engagement with the SSBs also includes emerging developments like digital ID, open application program interfaces (APIs), and distributed ledger technologies. The team leverages these engagements with the SSBs to analyze and if appropriate integrate these new developments into the WBG operations. The World Bank also contributes to disseminating standards through convening events, such as Global Payments Week and the Regional Payments Week and collects and curates data on global payment systems development .
The World Bank has supported the development and implementation of payment systems reforms in over 120 countries. These have been instrumental in helping the World Bank client countries to rapidly adopt sophisticated infrastructures and approaches, notable examples being Real Time Gross Settlement (RTGS) Systems; national payments laws; legal and regulatory framework for e-money and mobile money, and agent-based models; and national payments system oversight.
- The World Bank helped RTGS technology spread from fewer than 10 countries in the 1990s to near universal coverage now. It allows better risk management in interbank settlement and increases resilience to financial shocks and improving settlement time improves efficiency.
- The World Bank has helped shape new approaches to implement retail payment systems like Automated Clearing Houses and has shaped the product offerings in the market to include integrated solutions making it easier for countries with low capacity to rapidly rollout new systems. There is work currently underway to develop set of approaches and best practices for rolling out next generation payment systems and services like faster payments and open APIs.
- The World Bank’s cutting-edge focus on payment system oversight helped foster a broad scope of the function in the vast majority of central banks across the world.
- The World Bank led global efforts paired with country-level interventions reduced the cost of remittances significantly, contributing to an estimated total saving of $145 billion.
- The World Bank team played a critical role in facilitating the timely and efficient process of cash transfers in emergency and crisis situations in a number of countries, most recently during the Ebola crisis in West Africa.
Who We Work With
In client countries, we work with financial-sector authorities, central banks, capital market authorities, other supervisory and regulatory authorities, regional development banks, regulatory agencies and donors – such as the Bill & Melinda Gates Foundation, the United Kingdom’s Department for International Development (DFID), and the development agency of Switzerland (SECO).
Globally, we partner with the BIS (particularly the CPMI)and with IOSCO, and the International Telecommunications Union (ITU) to develop global standards, guidelines and best practices and their wider adoption. The World Bank also has ongoing dialogue with regulators across the World to identify and shape the regulatory and policy priorities with respect to payments and market infrastructures.