US Fed Official on Cross-Border Payment Challenges

US Federal Reserve Board governor Christopher J. Waller expressed skepticism over the feasibility of interlinking domestic fast payment systems like India's UPI with international networks, citing potential increases in legal and compliance costs for banks. Speaking at the Global Fintech Fest, Waller emphasized that while faster and cheaper global payments are desirable, they come with trade-offs and highlighted that some frictions in the current system are necessary for compliance and risk management. He noted that the US is prioritizing the development of its internal FedNow network and remains cautious about the technical and operational complexities of global interlinking. Despite his reservations, Waller acknowledged the ongoing research into emerging technologies aimed at enhancing cross-border payment efficiency. India, a major recipient of remittances, continues to advocate for linking fast payment networks to reduce transaction costs. RBI executive director P Vasudevan remains optimistic about future linkage between FedNow and UPI, despite Waller's concerns about the scalability of such systems.