Page 71 - ITU-T Focus Group Digital Financial Services – Interoperability

ITU-T Focus Group Digital Financial Services
Interoperability

Figure 5 – Interoperability scenarios at the global level

"Scaling up" of risks

25. Payment system risks take on new dimensions in the context of international interoperability. The scaling
up of such risks does not imply only a shift in magnitude, but a qualitative change as well, since every cross-
border link triggers complexities that relate to the interaction of the different national jurisdictions involved
in the interoperability agreement and raises important issues of legal, technical, administrative, business, and
operational consistency. The related challenges vary with the specificities of each of the linked systems and the
legal, technical regulatory, administrative, business, and operational environments characterizing each of the
underlying national jurisdictions involved in the agreement, and grow with their differences or incompatibilities.

26. International interoperability raises greater legal and regulatory challenges than national interoperability.
Whereas a national interoperability agreement falls under a single legal regime, and is therefore governed under
one consistent set of rules administered by the relevant national authorities, international interoperability
agreements expose the linked PSIs to cross-border and cross-PSI events and call into question a multitude
of legal and regulatory regimes that may differ substantially across national jurisdictions and are handled by
authorities from different countries. Internationally interoperable payment services are processed in different
national PSIs (and via different national intermediaries), which are subject to different national applicable
sets of rules and regulations. Cooperation and coordination failures among overseers and regulators can also
represent important impediments to international interoperability, as owners and participants of linked PSIs
may need to deal frequently with various different national authorities, each with their own specific mandates,
regulations, procedures and practices, which in some critical aspects may be duplicative or even inconsistent.

27. Conflicts of laws and regulations may arise in the context of international interoperability agreements.
These conflicts arise when there is no clarity as to which specific laws, regulations and procedures apply to
the transactions processed via the scheme or system links, and if there is no certainty as to how the various
national oversight authorities involved handle emerging legal and regulatory issues and controversies. In
extreme circumstances (e.g., the default of a participant in one of the systems), uncertainties or conflicts may
arise if the rules governing the scheme or system links do not clearly specify the procedures to be followed
in such circumstances.

Conflicts may also arise when the underlying legal basis, and in particular the contracts between the participating
entities, do not clearly define the rights and obligations of the linked PSIs (as well as the intermediaries, in
case of indirect participation), and their participants. Finally, conflicts may stem from differences in laws
and regulations applicable to the linked PSIs (and any intermediary to the transactions processed) and their

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