Swift has taken a big step to realising one of the primary goals of its global payment initiative (gpi) by announcing an agreement with the Federal Reserve Banks and The Clearing House to support end-to-end payments tracking across their respective wire services.
Launched in February 2017, Swift gpi comprises a range of service level agreements intended to improve the customer experience in correspondent banking by increasing the speed, transparency and predictability of cross-border payments. With 12 major transaction banks already live on the service, Swift is anticipating an influx of additional participants over the coming months.
To make a real impact, the interbank co-operative needs to extend the benefits of the gpi service beyond its own network by tracking payments flows as they move in and out of private domestic market infrastructures.
Since gpi payments carry additional information in the messages to flag them as gpi, member banks need a standardised, local market practice in order for these payments to be exchanged through local clearing systems not using Swift. The agreement to align messaging formats across Fedwire and Chips for gpi opens up the major USD clearing systems for participating banks.
Swift says it has now set its sights on working with the Bank of Japan Financial Network System (BOJ-NET) and SIX’s Swiss Interbank Clearing, for future gpi compatibility.
“Support from the market infrastructure community is a key factor for success,” sayss Stephen Grainger, head of North America at Swift. “Taking a standardised approach to identifying transactions for SWIFT gpi in these local clearing systems will reduce fragmentation and costs for banks. We look forward to working more closely with these and other market infrastructures as the industry realises its goal for faster, more transparent and traceable cross-border payments.”