Cross-border payments face fragmentation risk

Cross-border payments remain “the most glaringly unfinished business of financial modernisation”, according to Fabio Panetta, governor of the Bank of Italy and chair of the BIS Committee on Payments and Market Infrastructures, who has warned that slow, costly and fragmented payment channels are becoming a test of global economic connectivity.

Speaking last week in London, Panetta said domestic payments had been transformed over the past two decades, becoming faster, cheaper and available around the clock. Cross-border payments, by contrast, still often run through slower systems shaped by fragmented rules, high costs and limited transparency.

For corporate treasurers, that gap is practical rather than theoretical. International payments remain harder to track, more expensive to process and more exposed to delays than domestic flows, complicating liquidity planning, supplier payments, collections and foreign exchange management.

Panetta said the issue now sits beyond financial efficiency. “It is becoming a test of whether the global economy can remain connected in a world increasingly exposed to strategic rivalry,” he said.

The economic case for reform is clearest in trade and remittances. Panetta said cross-border payment channels are as important to firms serving international customers or sourcing goods abroad as the physical infrastructure that moves goods. Remittances have risen by 60% over the past decade and reached US$650bn in 2024 for low and middle-income countries, broadly comparable to the combined value of foreign direct investment and official development assistance.

Costs remain high. The global average cost of remittances is still close to 6.4%, more than double the G20 and UN target of 3% by the end of 2030. Reducing costs to that target could generate annual savings of between US$7bn and US$22bn.

Stablecoins are gaining attention in some markets as an alternative, especially where users face weak currencies or capital controls. Panetta said their appeal was understandable, but warned that evidence on efficiency remains inconclusive. A preliminary Banca d’Italia analysis found no systematic cost advantage, with on-ramp and off-ramp fees pushing costs as high as 9% in some cases.

Structural frictions remain the deeper problem. Cross-border payments must navigate multiple jurisdictions, currencies, time zones, compliance rules and data requirements. Legacy messaging formats still block straight-through processing, correspondent banking has become more concentrated and foreign exchange costs remain a major obstacle where local currency liquidity is thin.

The G20 Roadmap on cross-border payments, launched in 2020, has started to address some of those issues. Around 80% of payment systems have either migrated to ISO 20022 for domestic payments or plan to do so, while direct access for non-bank payment providers has expanded to 45% of fast payment systems and 39% of real-time gross settlement systems. Yet progress remains incomplete. None of the G20 targets on speed, cost, transparency and access has been met for remittances.

Geopolitics now threatens to make the task harder. Panetta said sanctions following Russia’s invasion of Ukraine had shown that payment infrastructures are not merely technical arrangements, but “instruments of economic statecraft”. His warning is that parallel systems could weaken interoperability, increase costs and reduce liquidity, especially for lower-income economies. “Fragmentation would deliver neither resilience nor sovereignty, only higher costs, shallower liquidity and new divisions,” Panetta said.

To keep the reform agenda moving, he called for national multi-stakeholder action plans covering payment infrastructure, regulation and global reach. Priorities include longer operating hours, wider settlement windows, fuller adoption of ISO 20022, more transparent fees and FX mark-ups, stronger competition between banks and non-bank providers, and data frameworks that support cross-border exchange while protecting privacy.

Central bank money should remain the foundation, Panetta argued, even as private payment solutions and digital technologies evolve. As he put it in his closing line: “Interconnect to stabilise. That is the guiding principle - and the only path forward.”

 

Canada offers US$1bn loans to tariff-hit metal producers

Canada’s Business Development Bank is providing up to US$1bn in loans for steel, aluminium and copper producers directly affected by tariffs, as the government seeks to ease working capital pressure in sectors exposed to compressed margins and disrupted trade flows. The financing envelope, announced as part of a wider Government of Canada support package, is aimed at companies that were viable before the tariff measures but are now facing a temporary liquidity shock. BDC said the focus is on businesses whose cash flow has been strained by a changing tariff environment, rather than on companies already structurally weak.

Loans will range from US$2m to US$50m, scaled according to business size and need, with repayment over 36 months at preferential rates. The programme is intended to help companies maintain operations, manage working capital, find alternative markets and continue production while trade conditions remain unsettled.

“A thriving steel and aluminium industry powers our manufacturing, construction and defence sectors, but these companies are facing unprecedented tariffs,” commented Isabelle Hudon, president and chief executive of BDC. “When markets turn unfair, BDC steps up to give them the tools to stabilise their operations, keep their doors open and keep producing. Supporting businesses is all we do, but today it’s no longer just about economic growth, it’s about economic sovereignty. Together we’ll rise above the disruption and keep our focus on long-term success.”

The pressure is particularly acute for producers with tooling already configured for specific customers and forward contracts already signed. In those cases, companies may have limited scope to pivot quickly, leaving them to keep shipping under weaker margins while tariff costs work through the business.

The scheme speaks directly to the finance challenge created by tariffs, where the cost impact can arrive faster than companies are able to reprice contracts, redirect sales or restructure supply chains. For producers still tied into forward orders and existing customer specifications, that can turn a margin squeeze into a working capital problem, even where the underlying business remains viable.

The new envelope sits alongside BDC’s existing tariff response tools. These include a US$500m Pivot to Grow programme for financing and advisory services, a US$1.2bn Softwood Lumber Guarantee solution and a US$6bn Defence Platform covering financing, investment, consulting and ecosystem support.

BDC said the latest programme is not intended to solve every challenge facing the metals sector, and that it will continue monitoring market conditions with companies and industry associations.

 

UK business confidence falls but resilience holds

UK business confidence fell sharply in April as firms reacted to rising inflation, higher interest rates and global uncertainty, although sentiment remained above its long-term average, according to the latest Lloyds Business Barometer. Overall confidence declined 11 points to 44%, but stayed well above the long-term average of 30%. The sharper shift came in views of the wider economy, where confidence fell 17 points to 33%, the largest monthly drop since April 2020. Some 56% of businesses said they were optimistic about the economic outlook, down nine points, while 23% were more pessimistic, up eight points.

The decline suggests firms are becoming more cautious about external conditions, even as they remain relatively confident about their own prospects. Business trading outlook confidence fell by a more modest six points to 54%. Nearly two-thirds of firms, at 63%, expect stronger output over the next year, down from 66%, while 9% expect weaker activity, up from 6%.

“Businesses told us their confidence fell as inflation pressures re-emerged, global uncertainty persisted and costs remained elevated,” noted Amanda Murphy, chief executive of Lloyds Business and Commercial Banking.

Companies expecting weaker activity cited economic uncertainty, higher cost pressures and softer customer demand. The findings point to a more disciplined operating environment, with businesses still looking for growth but placing greater emphasis on margin protection, cost scrutiny and contingency planning.

Growth plans have not disappeared. Most firms are still looking to invest in technology, training and AI, while many are also focused on improving products and services. More than a third are considering entering new markets, although the share has fallen from earlier in the year. Lloyds said 39% of businesses were aspiring to enter new markets in April, down from 43% in March.

Hann-Ju Ho, senior economist at Lloyds Commercial Banking, said the fall in new-market ambition “could be linked to heightened global uncertainty following the conflict in the Middle East.”

Staffing and pay expectations were relatively stable. A majority of firms, 57%, said they planned to increase headcount, while 17% expected to reduce staffing levels. Lloyds said only slightly more firms were anticipating smaller pay rises over the coming year.

Regionally, confidence fell in 11 of the UK’s 12 regions and nations. The East Midlands was the most confident region, supported by stronger customer demand, while Northern Ireland recorded the sharpest decline. Wales was the only nation to report an increase. Only the South West and Northern Ireland were below the 30% long-term average.

 

US funds lead equity comeback

UK investors returned to equity funds in April after 10 consecutive months of selling, but the recovery was concentrated in US-heavy strategies as the Middle East war weighed more heavily on other regional markets, according to Calastone. The latest Fund Flow Index shows investors added a net £1.08bn to equity funds during the month, making April the strongest month for inflows since April 2025. The rebound followed a record period of equity fund outflows between June 2025 and March 2026.

Flows were highly selective. US equity funds attracted £1.14bn, while global equity funds, which are typically heavily exposed to US markets, drew £1.33bn. Every other equity category suffered withdrawals. Asia-Pacific funds saw the largest outflows, at £383m, followed by emerging markets funds at £355m and European equity funds at £104m. UK equity funds also remained in outflow, losing £342m. Even so, Calastone said that was the best result for UK-focused funds since December 2024, when flows were distorted by the aftermath of UK budget speculation.

Passive funds dominated the rebound. Investors added £2.63bn to index-tracking funds in April, while withdrawing £1.55bn from active funds. The resulting £4.2bn gap in favour of passive funds was the third largest in Calastone’s record.

Edward Glyn, head of global markets at Calastone, said the war in the Middle East had disrupted energy and feedstock flows to large parts of the world, while leaving US supplies “largely intact, even if prices are higher”. He added that Asia and Europe were the worst affected regions, while the US market surged by almost 10% as weaker data brought forward expectations of Fed rate cuts.

“The rally still looks narrow, with a small group of large-cap names doing most of the work,” Glyn said, but it was strong enough to draw money back into US and global equity funds.

Money market funds also played an important role in the April rotation. Investors had added £3.78bn to money market funds during the 10-month run of equity outflows, but withdrew £671m in April as equity inflows returned. Fixed income funds were broadly stable after March’s sell-off, with negligible outflows of £27m as higher yields tempted new buy orders. Together, the flows suggest investors were willing to move some capital out of defensive liquidity positions, but only selectively and mainly towards US-heavy equity exposure.

 

Tokenised Treasury redemption crosses bank rails

Ondo Finance has completed a pilot redemption of tokenised US Treasuries with Kinexys by J.P. Morgan, Mastercard and Ripple, testing whether an on-chain fund redemption can trigger cross-border bank settlement in near real time.

Ripple redeemed tokenised assets issued on the XRP Ledger, a public blockchain. Ondo processed the redemption and sent a fiat payout instruction through Mastercard’s Multi-Token Network, which routed the instruction to Kinexys by J.P. Morgan. Kinexys then debited Ondo’s Blockchain Deposit Account and settled the US dollar proceeds to Ripple’s bank account in Singapore through J.P. Morgan’s correspondent banking network.

The transaction matters because it joins the asset and cash legs of a tokenised fund redemption more tightly than usual. One side of the transaction took place on a public blockchain. The cash leg moved through bank infrastructure. Ondo said the process was completed across borders and banks, outside conventional cut-off windows.

That remains one of the main gaps in tokenised real-world assets. Issuing assets on-chain is only part of the problem. Investors also need a reliable way to redeem them, move proceeds and settle into bank accounts without falling back on slow manual processes or limited operating hours.

Treasury teams are likely to watch that settlement piece closely. Tokenised Treasuries may promise greater speed and availability, but their practical value depends on whether redemptions can connect cleanly to regulated cash channels, across currencies, banks and jurisdictions.

The pilot also shows how established financial infrastructure is being pulled into tokenised asset workflows. Mastercard acted as the link between the on-chain redemption and the fiat payment instruction, while Kinexys handled the bank-side settlement process and connection into J.P. Morgan’s correspondent banking network.

Ondo said the framework is designed to support redemptions from any public blockchain on which its Ondo Short-Term US Government Treasuries fund is issued, including the XRP Ledger.

 

SEB joins Komgo trade finance network

SEB has joined Komgo’s trade finance network through the implementation of Konsole, giving its corporate clients another digital channel for managing trade finance instruments across the Nordic region and international markets. The move connects SEB to Komgo’s multibank trade finance platform, allowing clients to submit and manage instructions for bank guarantees, standby letters of credit, letters of credit and related instruments through a structured digital workflow.

For Nordic corporates, the practical benefit is the ability to use one platform to interact with SEB alongside other banking partners, rather than relying on separate manual channels for each institution. Konsole provides real-time status updates, structured document exchange and centralised audit trails, which can help improve visibility across the lifecycle of a transaction.

The integration comes as Nordic companies continue to expand internationally and manage more complex supply chains. That raises the burden on trade finance teams, particularly where guarantees, letters of credit and document exchange still involve email, portals, manual checking or fragmented bank-specific processes.

SEB also plans to add Komgo’s Market and Trakk tools later, extending the digital setup to price quotation and document traceability. Those additions would broaden the bank’s trade finance offering beyond instruction handling into more of the pre-transaction and tracking workflow.

Komgo said its network now connects more than 300 corporates and financial institutions across 50 countries. SEB’s adoption strengthens its Nordic footprint and adds a major regional bank to the platform.

The wider significance is that multibank trade finance platforms are becoming more important as corporates look for standardised digital channels across banking relationships. For treasury and trade finance teams, that can mean fewer manual handoffs, clearer audit trails and better control over instruments that remain central to cross-border trade but have often lagged other areas of corporate banking in digitisation.

 

Deutsche Bank extends coal transition deadline

Deutsche Bank has extended the deadline for existing clients covered by its thermal coal guideline to provide credible transition plans, citing a more complex regulatory environment and differing speeds of energy transition across regions. Under the revised timeline, existing clients in scope of the guideline will now have until the end of 2027 to present transition plans and ensure that the share of revenue from thermal coal falls below 50%. The previous deadline was the end of 2025.

For new clients, credible transition plans remain a precondition for access to Deutsche Bank financing, including lending and capital markets activity.

The bank said the transition plans must set out an exit from thermal coal by 2030 for companies headquartered in OECD countries. For clients in non-OECD countries, the requirements are a reduction in thermal coal revenue share to 30% by 2030 and a full exit by 2040.

Deutsche Bank said the revised implementation timeline is intended to keep its approach aligned with regulatory developments and with regional differences in the pace of energy transition. The change does not alter its ban on financing new thermal coal-fired power plants, material expansions of existing plants, new thermal coal mining projects or associated infrastructure.

The bank also said it continues to follow its broader decarbonisation targets. In coal mining, covering thermal and metallurgical coal, financed Scope 3 emissions were reduced by 33% by the end of 2025 compared with the 2022 base year. Deutsche Bank is still targeting a 49% reduction by 2030 and a 97% reduction by 2050.

Credit commitments to clients in the coal mining sector were stable at €1.2bn at the end of 2025, while commitments based on coal revenue dependency fell slightly year on year to €0.2bn.

The update highlights the tension banks face in applying transition policies across regions moving at different speeds. For corporate borrowers, the shift gives existing clients more time, but keeps the direction of travel clear: access to financing remains tied to transition planning and reduced coal exposure.

 

State Street takes liquidity fund onchain

State Street Investment Management and Galaxy Asset Management have launched a tokenised private liquidity fund designed to support onchain cash management for eligible investors. The State Street Galaxy Onchain Liquidity Sweep Fund, known as SWEEP, is structured to allow stablecoin holders to move cash into a yield-bearing asset, subject to stablecoin availability in the fund’s portfolio. The fund supports subscriptions and redemptions using PayPal USD stablecoins, subject to portfolio availability.

SWEEP is aimed at qualified purchasers that meet eligibility criteria and minimum investment thresholds. It is being positioned as an onchain cash management product rather than a broad retail liquidity vehicle.

The fund launches on the Solana blockchain, with further integrations planned for Stellar and Ethereum. Galaxy’s digital infrastructure provides the tokenisation technology used for the issuance and management of SWEEP tokens.

Several service providers sit around the structure. Anchorage is digital custodian for the fund’s stablecoin investments, while State Street Bank and Trust Company is custodian for the securities holdings. NAV Consulting serves as transfer agent. Galaxy is also using Chainlink NAVLink to publish the fund’s daily net asset value onchain and Chainlink CCIP for cross-chain interoperability.

The practical significance is in the cash management mechanics. Stablecoin holders often face a gap between holding digital cash and deploying it into an instrument that can generate yield while remaining available for programme-based liquidity needs. SWEEP is designed to address that by linking stablecoin balances to a tokenised liquidity fund structure.

 

LBBW digitises trade finance applications with Surecomp

LBBW has gone live with Surecomp’s RIVO platform to support the digital management of guarantees and letters of credit for corporate customers. The German bank is using the platform to centralise the initiation, processing and management of those trade finance products. Corporate clients will be able to submit, track and manage guarantee and letter of credit applications through a single digital channel, rather than relying on more fragmented application and follow-up processes.

The implementation is aimed at improving visibility over application status, reducing manual handling and shortening turnaround times. It also gives LBBW a more standardised process across its trade finance business, which the bank expects to support operational control and reduce risk as transaction volumes increase.

RIVO will also be used to support faster onboarding of new trade finance customers. That could matter for corporates where guarantees and letters of credit remain critical to cross-border trade, but where paper-heavy processes can slow execution and make it harder to monitor outstanding applications.

The move fits a broader pattern in trade finance digitisation. Banks are under pressure to make traditional instruments easier to initiate and manage online, while corporates want better transparency, fewer manual touchpoints and clearer audit trails across banking relationships.

For LBBW, the launch adds another digital layer to its trade finance offering in Germany. For customers, the practical test will be whether the platform reduces friction in day-to-day guarantee and letter of credit workflows, rather than simply shifting existing processes into a new portal.

 

Elavon launches payments suite for small businesses

Elavon has launched a payments and software suite for small businesses, bringing together payment acceptance, industry-specific tools and support services through a single platform. Elavon Business Solutions is designed for small firms across sectors including retail, restaurants, services and e-commerce. The offering combines payments, point-of-sale tools, software and reporting features, with bundles tailored to different industry workflows.

The platform allows business owners to manage payments in-store, online, on the move or over the phone through one login and a unified portal. Elavon said the aim is to reduce the complexity created when smaller firms rely on separate systems for payment acceptance, reporting and operational software.

Features include multi-channel payment acceptance across different tender types, industry-specific software and point-of-sale options, integrated reporting and tiered plans that allow businesses to start with a simpler setup and add functionality as they grow.

The launch also reflects the continued push by payment processors to bundle software and services around core acquiring capabilities. For smaller businesses, the value of these platforms increasingly lies not just in accepting payments, but in gaining clearer visibility over cash flow, sales trends and day-to-day operations.

Security and reliability are also part of the positioning, with the service backed by Elavon’s payment infrastructure and U.S. Bank ownership. Each plan includes onboarding, account management and 24/7 human support.

The product is aimed at businesses that want to avoid changing providers or platforms as their needs become more complex. That makes scalability a central part of the proposition, particularly for firms moving between physical, online and mobile sales channels.