SWIFT and the Japanese Bankers Association (JBA) have announced a new Foreign Exchange Yen Clearing System (FXYCS) mapping recommendation
Tokyo, 14 September 2018 – SWIFT and the Japanese Bankers Association (JBA) have announced a new Foreign Exchange Yen Clearing System (FXYCS) mapping recommendation, of which FXYCS direct members may adopt to facilitate end-to-end tracking of cross-border payments on interbank clearing system, Bank of Japan Financial Network System (BOJ-NET). This best practice will support SWIFT’s cross-border global payments innovation (gpi) when it goes live on FXYCS in November 2018.
Launched in 2017, SWIFT gpi offers users greater control over their treasury functions, with tracking of their payments over the entire transaction life cycle, fast delivery of payments to end beneficiaries in minutes or even seconds, and full transparency over transaction costs. The local market practice will also ensure that a standardised approach is in place when identifying transactions for SWIFT gpi, leading to reduced fragmentation and higher time and costs savings for banks. This will be achieved through the creation of end-to-end gpi service level agreements or ‘business rules’, between banks participating in payment infrastructures such as FXYCS.
Alain Delfosse, Head of Japan, SWIFT, says, “The Japanese banking industry is evolving quickly and customer needs are changing. Through enablement of SWIFT gpi on FXYCS over BOJ-NET, banks participating in FXYCS, large and small alike, will gain additional and valuable control over their cross-border transactions through functions that include end-to-end tracking and a planned stop-and-recall capability. This will change the way banks manage their international remittances and the experience they ultimately offer end customers, placing SWIFT gpi at the heart of the banking transformation in Japan.”
SWIFT gpi now accounts for 30% SWIFT cross-border payment traffic worldwide. The enablement of SWIFT gpi on FXYCS over BOJ-NET will pave the way for the use of the Japanese Yen as a gpi-supported currency in cross-border payments in Asia and beyond.
“To support greater speed and transparency in cross-border payments, the Japanese Bankers Association is pleased to announce that the 26 direct members of FXYCS, including both gpi-enabled banks and non-gpi members, have agreed on a SWIFT gpi mapping recommendation to be used in payment instructions over FXYCS in line with the SWIFT Standards Release 2018. As a result of this agreement, those direct members of FXYCS who wish to include gpi information can apply this recommendation in their funds transfer business over FXYCS from November 2018,” says Ayako Suwa, Head of the Foreign Exchange Yen Clearing System Administration Office, Operations & Clearing System Administration Department, Japanese Bankers Association.
Payment market infrastructures like FXYCS are necessary in enabling end-to-end tracking of cross-border payments and are responsible for local clearing and settlement of international payments that reach a domestic or regional market. Currently, SWIFT gpi-enabled banks are able to exchange gpi payments over the 56 SWIFT-connected market infrastructures, including Fedwire, CHIPS and CIPS.
The FXYCS mapping recommendation will ensure that each transaction is Standards MT Release (SR2018) compliant and includes a tracking reference, known as a unique End-to-End Transaction Reference (UETR), for extended and more efficient tracking. SWIFT is currently working with banks, including Mizuho Bank, MUFG Bank, Sumitomo Mitsui Banking Corporation and Bank of China, on the implementation of the FXYCS mapping recommendation.
Mr Delfosse adds, “We are deeply committed to our role as a contributor and enabler of financial innovation and will continue to work closely with banks in Japan to this end. Through our network of over 11,000 financial institutions around the world and member-owned cooperative status, we are offering a cross-border payments service that is efficient, secure and standardised, one that will serve as a game-changer in the Japanese payments landscape.”
SWIFT gpi has seen rapid adoption with more than 100 billion USD in SWIFT gpi messages sent every day, enabling payments to be credited to end beneficiaries within minutes - many within seconds. More than 210 banks, including 49 of the world's top 50 banks, have already signed up to the gpi service. In Asia Pacific, over 70 banks have committed to SWIFT gpi. Almost half of these banks are now live. By end of 2020, the SWIFT Community will have universally adopted the gpi service, a move that will see all 10,000 banks on SWIFT’s global network use the global payments innovation service for cross border payments.
Quotes from banks for press use:
Michio Noishiki, General Manager, Global Products Coordination Department, Mizuho Bank, Ltd.:
“In view of the improved transparency around international remittance status which SWIFT gpi aims to bring to the global market, Mizuho believes that this mapping recommendation will ease implementation of supporting solutions for those remittances via FXYCS.”
Motoi Mitsuishi, Transaction Banking Group, Chief Executive Officer, MUFG Bank, Ltd.:
“SWIFT gpi brings much better service experiences for international remittance to the customers both within and outside Japan. It is so beneficial for the Japanese community that FXYCS starts its support for gpi from November 2018. We MUFG Bank are closely working with SWIFT and Japanese Bankers Association (FXYCS), and continuously make efforts to enhance the customer services for international remittance.”
Airo Shibuya, Executive Officer, Head of Transaction Business Division, Sumitomo Mitsui Banking Corporation:
“SMBC believes that gpi will be “the new norm” for the cross-border payment and we have been fully committed to gpi from the very beginning. FXYCS support of gpi will be an important milestone for the Japanese community toward the global adoption of gpi which SWIFT is planning for 2020.”
Takako Miki, Deputy Manager, Funds Settlement Dept., Bank of China Tokyo Branch:
“Bank of China was one of the earliest banks to participate in the SWIFT GPI project. We are very honoured to be able to join the FXYCS GPI project this time. With the launch of the FXYCS GPI project, Bank of China has been constantly improving the international payment products for the corporate, individual and financial institution customers, further meeting their diversified needs such as the same day use of funds, transparency in fees, and end-to-end payments tracking and so on. It makes that customers can get a much higher quality service experience through the international remittance in Bank of China.”
+852 2107 8860
The SWIFT global payments innovation (SWIFT gpi) is the largest change in cross-border payments over the last 30 years and is the new standard. SWIFT gpi dramatically improves the customer experience in cross-border payments by increasing their speed, transparency and end-to-end tracking. Hundreds of thousands of cross-border payments are today being sent using the new gpi standard, and payments are made quickly, typically within minutes, even seconds.
SWIFT gpi allows corporates to receive an enhanced payments service, with the following key features:
- Faster, same day use of funds within the time zone of the receiving gpi member
- Transparency of fees
- End-to-end payments tracking
- Remittance information transferred unaltered
As an initiative, SWIFT gpi engages the global banking industry and fintech communities to innovate in the area of cross-border payments while reducing their back-office costs. Since its launch in January 2017, gpi has dramatically improved the cross-border payments experience for corporates in over 500 country corridors. Key features of the gpi service include enhanced business rules and a secure tracking database in the cloud accessible via APIs. Thanks to SWIFT gpi, corporates can grow their international business, improve supplier relationships, and achieve greater treasury efficiencies. Overall, nearly 50% of SWIFT gpi payments are credited to end beneficiaries within 30 minutes, and almost 100% of payments within 24 hours. Those that take longer typically involve more complex foreign exchange conversions, compliance checks or regulatory authorisations.
In addition to the more than 210 financial institutions that have adopted gpi, over 55 payment market infrastructures are already exchanging gpi payments, enabling domestic exchange and tracking. Payment market infrastructures have a critical role to play in facilitating the end-to-end tracking of cross-border payments because as soon as international payments hit the destination country, they are typically cleared through local payment infrastructures.
SWIFT is a global member owned cooperative and the world’s leading provider of secure financial messaging services. We provide our community with a platform for messaging and standards for communicating, and we offer products and services to facilitate access and integration, identification, analysis and regulatory compliance.
Our messaging platform, products and services connect more than 11,000 banking and securities organisations, market infrastructures and corporate customers in more than 200 countries and territories. While SWIFT does not hold funds or manage accounts on behalf of customers, we enable our global community of users to communicate securely, exchanging standardised financial messages in a reliable way, thereby supporting global and local financial flows, as well as trade and commerce all around the world.
As their trusted provider, we relentlessly pursue operational excellence; we support our community in addressing cyber threats; and we continually seek ways to lower costs, reduce risks and eliminate operational inefficiencies. Our products and services support our community’s access and integration, business intelligence, reference data and financial crime compliance needs. SWIFT also brings the financial community together – at global, regional and local levels – to shape market practice, define standards and debate issues of mutual interest or concern.
Headquartered in Belgium, SWIFT’s international governance and oversight reinforces the neutral, global character of its cooperative structure. SWIFT’s global office network ensures an active presence in all the major financial centres.
About Japanese Bankers Association (JBA) and Foreign Exchange Yen Clearing System (FXYCS)
The Japanese Bankers Association (JBA) is an industry body that represents 191 banks (including 54 foreign banks), 3 bank holding companies and 58 local bankers associations in Japan, as of the end of July 2018.
The Foreign Exchange Yen Clearing System (FXYCS), which was set up and is managed by the JBA, handles the exchanging and clearing of yen transactions related to foreign exchange, including large-value transactions, which encompasses dealings in foreign exchange markets, transfers to yen accounts of correspondents, and yen-denominated fund transfers.
The FXYCS consigned the operations of foreign exchange yen clearing to the Bank of Japan (BOJ) and the operations are conducted via the Bank of Japan Financial Network System (BOJ-NET), the settlement infrastructure which was built for the efficient and safe settlement of funds and Japanese government bonds (JGBs), between financial institutions and the BOJ. All of the FXYCS transactions are conducted through real-time gross settlement (RTGS) using central bank money.
As of the end of July 2018, a total of 201 banks, including 55 foreign banks, are participating in FXYCS. The membership consists of 26 direct participants, 174 indirect participants, and CLS Bank.
The BOJ-NET, the online system for processing the settlement of funds of current accounts at the BOJ, introduced XML/ISO 20022 messaging already in October 2015.
 International Monetary Fund data shows that the Yen accounts for just 4.81% of the world’s total foreign exchange reserves in 2018Q1, while the US dollar makes up 62.48% and the Euro 20.39%.