WASHINGTON—The Federal Reserve is expressing concerns over expanding fast payment systems, especially those interlinking with international systems for making payments at the global level, according to a new report.
The concerns were expressed by Fed Board Member Christopher J. Waller, who suggested the interlinking of payment systems could lead to legal complications that can increase the compliance for the banks in the network, Business Today said.
“There is no silver bullet that increases speed and efficiency without trade-offs,” Waller said during remarks at the Global Fintech Fest in Mumbai. “Unless new solutions are found, interlinking fast payment systems might increase the risk-management burden for banks participating in them.”
Waller further said interlinking fast payment systems may introduce a heightened level of risk management responsibilities for banks that are involved in the process, Business Today reported.
‘Not All Frictions are Bad’
“Today’s consumers and businesses can generally send a payment anywhere in the world, but they all seem to want faster and cheaper global payments, just like we always want faster flights and cheaper airfares,” Waller said during his remarks, according to the report. “However, I am not entirely convinced that interlinking arrangements will necessarily deliver on those goals...not all frictions that slow payments down are bad. Certain frictions are purposely built into the global payment system for compliance and risk-management reasons.”