Central Banks Extend Domestic Rails for Cross-Border Payments as FedNow Eyes Global Expansion
The Federal Reserve’s proposal to expand FedNow for international settlement joins a wave of central bank initiatives leveraging real-time domestic infrastructure and tokenized platforms for cross-border payments. PYMNTS data shows 14% of U.S. consumers made cross-border payments in the past year, with 63% using digital wallets—underscoring demand for faster, cheaper international transfers.
Overview
The Federal Reserve proposed allowing U.S. banks to use intermediaries for international settlement while leveraging FedNow’s real-time domestic rails. This approach sidesteps the traditional correspondent banking system that delays transactions and inflates costs.
Parallel initiatives are advancing tokenization. The Bank for International Settlements-led Project Agorá tests tokenized central bank money for cross-border payments among seven central banks. Project mBridge, involving the UAE Central Bank and Saudi Arabia’s SAMA, processed 4,047 transactions worth $55.49 billion as of November 2025, using distributed ledger technology for CBDC-based transfers.
Core Developments
“Moving money across borders still means navigating a patchwork of correspondent banks, local clearing systems and compliance checks that slow transactions, inflate costs and introduce uncertainty to every step.”
PYMNTS data reveals that 1 in 3 small businesses avoids cross-border tools due to lacking standards. Meanwhile, two-thirds of banks now partner with fintechs for cross-border capabilities, signaling industry-wide recognition that interoperability demands collaboration.
Why This Matters
MENA hubs are positioned as critical nodes in this infrastructure overhaul. Both UAE and Saudi Arabia participate in mBridge, directly connecting their central banks to a tokenized settlement platform that reduces reliance on dollar-denominated correspondent banking. This aligns with regional priorities around financial sovereignty and Vision 2030 diversification goals.
“Project mBridge is unlikely to challenge dollar dominance directly, but it may incrementally erode it across specific corridors, sectors and use cases.”
— Alisha Chhangani, Atlantic Council
This assessment matters for MENA because the region’s participation in mBridge creates alternative payment corridors—particularly valuable for intra-GCC trade, remittances to South Asia, and B2B transactions where speed and cost matter more than currency denomination.
What’s Next
What to watch next: Track mBridge expansion beyond its current 5-central-bank membership and monitor whether Project Agorá’s tokenization tests lead to production deployment. MENA fintechs should prioritize technical integration with these emerging rails.
Conclusion
The convergence of domestic instant payment extensions (FedNow’s international proposal) and tokenized platforms (Agorá, mBridge) signals a fundamental architecture shift. MENA’s early participation positions the region as infrastructure rather than endpoint—a strategic advantage as global payment flows restructure around real-time, tokenized settlement.
Sources: PYMNTS, PYMNTS, Central Banking, UAE Central Bank
