A senior U.S. Treasury official expressed concerns that establishing a cross-border payments system outside a transparent regulatory framework could pose risks to economic stability, potentially leading to international ramifications.
According to Bloomberg, Brent Neiman, Assistant Secretary for International Finance at the U.S. Treasury, was particularly concerned about the potential for misuse of improperly regulated systems for money laundering and fraud. At a conference at the New York Federal Reserve, Neiman noted that “the United States must lead when it comes to cross-border payments to maximize the chances that any new systems with significant international usage reach the quality and standards we prefer.
Challenging Dominance
Although Neiman did not reference any particular system, Bloomberg highlighted that the remarks came shortly after the BRICS coalition’s proposal to create a cross-border payments system independent of any Western platform.
The BRICS Cross-Border Payments Initiative (BCBPI) was introduced by Russia, which founded the BRICS organization, in collaboration with China, India, Brazil, and South Africa. Its goal is to establish an alternative to the SWIFT cross-border network, which currently operates under U.S. oversight.
In addition to creating a multi-currency system that facilitates trade among BRICS participants, the BCBPI has also been touted as a means to challenge the global dominance of the U.S. dollar.
The Central Dollar
While BCBPI is still at the proposal stage, Neiman stressed that the U.S. should play an active role in shaping any international standards. He also underscored the importance of achieving regulatory clarity stateside, particularly by establishing a framework for stablecoins, which are frequently promoted for cross-border payments.
However, stablecoins represent just one solution within a worldwide payments network that is experiencing growing demand for cross-border transactions. Neiman emphasized that U.S. regulators should remain neutral toward specific payment methods, focusing instead on ensuring that the U.S. dollar is central to the global economy.
“Making the dollar-oriented system faster and more efficient would strengthen our hand in upholding US values like privacy and in bolstering both our national security and that of our allies,” Neiman said during his remarks at the conference. “If a poorly designed payments system were widely adopted (for cross-border payments) it could do significant harm to international financial stability and economic security.”
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