Christopher Waller, a member of the Federal Reserve Board of Governors, discussed the potential for US-India financial collaboration at the Global Fintech Fest in Mumbai. He highlighted constraints in the US fast payments system due to strict regulations, praising India's UPI for its efficient digital transactions. Waller emphasized the need for a compelling value proposition to integrate US banks with the UPI. He acknowledged the importance of public-private partnerships in advancing cross-border payments, foreseeing challenges in legal and compliance aspects outlined in the G20's roadmap.
The United States and India are on the brink of a potential financial collaboration that could revolutionize cross-border payments. Christopher Waller, a member of the Federal Reserve Board of Governors, hinted at the possibility of linking some American private banks with India's Unified Payments Interface (UPI) during the Global Fintech Fest in Mumbai.
Waller highlighted the current limitations in the US fast payments system due to stringent risk management and compliance requirements aimed at preventing fraud and money laundering. However, he expressed optimism about the prospect of integrating with the UPI as a solution to this challenge, emphasizing the need for a compelling value proposition to drive the integration forward.
While acknowledging the intentional frictions in the global payment system for security purposes, Waller praised India's tech-driven payments revolution facilitated by a successful public-private partnership that laid the groundwork for a robust digital payments infrastructure, fostering financial inclusion at a minimal cost.
The UPI, developed by the National Payments Corporation of India (NPCI), has emerged as a real-time payment system facilitating instant money transfers between bank accounts via mobile devices. Since its inception in 2016, the UPI has witnessed rapid growth, encompassing over 300 banks and enabling seamless, cost-effective digital transactions. Presently, it processes more than 10 billion transactions monthly, with a total transaction value exceeding Rs 15 trillion.
Waller commended private sector innovators for leveraging the public sector's foundation to enhance payment systems, introducing new capabilities while adhering to regulatory standards. He emphasized the pivotal role of public-private collaboration in advancing cross-border payments, suggesting that interlinking arrangements could enable banks from different countries to exchange payments through technical connections between their domestic systems.
Looking ahead, Waller underscored the importance of the G20's roadmap in addressing cross-border payment challenges and enhancing global payment systems beyond local boundaries. While technical connections are feasible, he noted that the real hurdles lie in navigating legal, compliance, and operational considerations to ensure a seamless and secure cross-border payment ecosystem.
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