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The attempt of US banks in the 1960s and 1970s to expand internationally was frustrated by the 1982 international debt crisis and the enactment of stringent and restrictive domestic banking regulations. Similar efforts by Japanese and European banks have not had much success because of several factors. Most banks do not view a global franchise as a priority. However, the increasingly international nature of modern banking requires the establishment of a globally-integrated payment system, preferably one managed by private entities.

Risk management standards should be considered for small retail electronic payment systems, such as the Visa and MasterCard networks. The Federal Reserve Board requires large-value networks, such as Fed Wire and Chips, to adhere to standards set form by the Lamfalussy Report. The application of Lamfalussy standards to retail networks is analyzed. While small-value, retail payment systems should adopt strategies to minimize their risk exposure, not all Lamfalussy standards are feasible for small networks., This article is adapted from an address at the recent Payments '96 Conference in San Francisco. Central banks are increasingly concerned about payments system risk and have actively encouraged private-sector [...]