05 September 2020

BIS: New correspondent banking data - the decline continues at a slower pace

- The number of active correspondent banks worldwide fell by about 3% in 2019 and about 22% between 2011 and 2019.- The volume and value of cross-border payments continued to grow over the last eight years, suggesting a higher concentration in payment flows.

Cross-border payments are vital for economic growth, international trade, global development and financial inclusion. Yet they are generally slower, more expensive, less transparent and less accessible than domestic payments. These long-standing issues have been thrown into sharp relief by improvements in domestic payments and by developers of proposals for new payment arrangements. The G20 has made enhancing cross-border payments a priority during the 2020 Saudi Arabian Presidency and has asked the Financial Stability Board (FSB) to coordinate the development of a roadmap to tackle the system's multidimensional problems. To address these issues, in response to a remit from the G20, the Committee on Payments and Market Infrastructures (CPMI) has developed the building blocks of a global roadmap with the aim of making durable improvements in cross-border payments.

Correspondent banking is a crucial part of any solution that enhances cross-border payments. To settle cross-border payments, most payment service providers rely on the so-called correspondent banking network¹ - a network that is shrinking and becoming more concentrated. Thus, monitoring these trends is of first-order importance for the international community.

To help do so, the CPMI will, for the next three years, publish an annual quantitative review based on payment message data that SWIFT has agreed to provide.² The review includes (i) this commentary, highlighting key trends; (ii) a chartpack; and (iii) the underlying data. It builds on similar analyses by the CPMI and FSB.

2019 CPMI quantitative review of correspondent banking data

The 2019 data confirm that correspondent banking relationships continue to contract in number. Despite the worldwide decline, they continue to play a pivotal role for cross-border payments. The statistics cover monthly payment message data for more than 200 countries and jurisdictions from 2011 to 2019.³ The data set lays out a network of bilateral relationships (either bank-to-bank or country-to-country). From these payment messages, the following measures can be calculated: (i) a cross-border payment message from one country to another identifies a corridor; (ii) a cross-border payment message from one bank to another identifies a correspondent banking relationship; and (iii) the count of active correspondents measures, corridor by corridor, the number of banks abroad that have received messages sent by banks in a given country.⁴

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