'Opaque' cross-border payment volumes could top $300 trillion in 5-10 years, Italy c.bank head says

MILAN, May 6 (Reuters) - Annual cross-border payments volumes are projected to pass $300 trillion in the next five to 10 years from $190 trillion in 2024, but processing such payments remains "slow, expensive and opaque," Italy's central banker said on Tuesday.

Cross-border payments have failed to benefit from the technological progress which have improved domestic payments, and integration efforts are needed, Bank of Italy Governor Fabio Panetta said in a speech at the annual meeting of the Asian Development Bank.

"The reason is that technology alone is not enough: Harmonized rules and procedures are essential on this front, and making progress on these aspects is more complex," he said.

In this respect, Panetta said, "the times are not so 'good'" with rising geopolitical tensions turning "control over global financial infrastructures into a tool of political leverage."

"Financial and payment infrastructures have become central to geopolitical dynamics, actively shaping global influence and strategic positioning. As a result, payments are becoming even more fragmented."

Panetta, a member of the European Central Bank's governing council, used to sit on the ECB's executive board where he oversaw work on a digital euro.

The ECB is working on creating a digital euro, an electronic currency with legal tender, in order to decrease the euro zone's reliance on U.S. payments systems providers and to provide a regulated alternative to privately run stablecoins.

Panetta said that crypto-assets were not suitable as a payment means given they have the potential for large losses.

Stablecoins, whose value is pegged to a reserve asset, could perform some payment functions but "face the risk of a 'run' like banks" and lack protection mechanisms such as central bank facilities or deposit insurance, he noted.

Also, "the proliferation of stablecoins running on non-interoperable blockchains risks fragmenting the payments landscape," Panetta said.

He added that further complications arose from differing regulatory frameworks and a lack of coordination, particularly between Europe and the United States.

Integration, by contrast, could increase stability and help counter political fragmentation.

"As global financial infrastructures become increasingly interconnected, the cost of geopolitical confrontations rises and their likelihood is consequently reduced," Panetta said.